Reader’s Question:

I’ve been wondering: how come some auto car insurance quotes have lesser premiums than other premiums, even though they have the same coverage?

N. L. Piner

Montpelier, VT

If you look closely at the coverage that your different auto car insurance quotes have, you’ll notice that, indeed, the cover the same areas. It’s the extent of coverage limit and deductibles that determines the difference in pricing between these different quotes.

Coverage limit is the extent of cash your insurance company will reimburse for any accidents you may get into. For example: one auto car insurance quote may cover up to $10,000 in property damage, with you paying the rest, while another may cover as far as $50,000 dollars for the damage you inflict. It all depends on the coverage limit of the insurance policy you’re looking up. The higher the coverage limit, the higher the premium of the policy.

Another factor that determines Auto car insurance quote are the deductibles you’re willing to pay. These deductibles are what you’ll have to pay before the insurance company steps in to cover the rest of the expenses. If you set your deductibles up to $500, your insurance company will only reimburse expenses that exceed your deductibles. That means if you incur $1,500 worth of damage, your car insurance company will reimburse $1,000 while you fork the $500 from your own wallet. This inversely affects your premium: the higher your deductibles, the lower your insurance premium. The only problem with high deductibles is that when you do get into an accident, you may not be able to handle the sudden loss of money it’ll take to cover the affected party’s damages.