Because of the risks associated with operating a vehicle illegally, auto insurance costs are an unavoidable aspect of motoring. Many consumers use a variety of resources to try and secure cheaper polices but many will rarely look at the reasons why an insurance carrier will be charging such high rates in the first place.
Many motorists feel that the level of coverage they receive from a policy in relation to the price they paid for it is a little unfair. A great insurance policy should always combine effective coverage with competitive rates but many drivers are now finding that careful driving and customer loyalty are rarely rewarded when a policy is due for renewal.
Auto insurance companies obviously view things a little differently. Although responsible drivers are more likely to be rewarded than careless ones, it should be noted that business operations (in terms of futures and actuaries) are dictated by the company underwriters using performance and settlement figures from the previous year of business. Figures are used to calculate auto insurance premiums and these will include repair costs, accident statistics and settlement fee averages.
Obviously, auto insurance providers are in business to generate a profit and will inevitably do all they can to make sure they retain those profits for themselves. However, some of the profits will actually be passed back to customers as a means of promoting loyalty. Wherever possible, carriers will reward safe and conscientious drivers first. This means that those with a less-than-perfect driving record will inevitably pay more for a policy than a motorist with an accident and incident-free history.