When you signed on the dotted line for your new auto, it seemed like you were on top of the world. You went shopping at the right time, and felt like you got a steal on the price. And then, the insurance bill came in the mail and the bottom on your perfect little world dropped out. What happened?
People buying a new auto for the first time may not realize this, but the bank will require them to keep full coverage on their car for the length of the loan. Now, you can get away with only liability coverage when you don’t finance a car – but things work a lot differently when the banks get involved, don’t they? You might even think that there is some sort of conspiracy going on involving the banks and insurance companies. While it is a good theory, the truth is that banks need to be sure that they will get their money, so they require full coverage insurance on a new auto. After all, who would continue making payments if the car were all smashed up because of an accident?
But why are these rates so high?
A lot of factors are involved in determining insurance rates on a new auto. The age of the driver, his driving record, the number of accidents on his record, and even where he lives – all these are factored into the rate. Because the costs of repairing a new auto are so high, insurance companies have to charge steep rates to recover their losses in the event of a wreck. (more…)