Personal Finance 1st Edition by Jack R. Kapoor

Exercise 27

1?What factors influence how much a person pays for automobile insurance?

---

2?What actions can a person take to reduce the cost of automobile insurance?

Action Application Search the Web or talk to an insurance agent to obtain suggestions for reducing automobile insurance costs.

Step 1 of 2

(1) Following are the factors which influence the premium of automobile insurance:

Type of automobile: The year, make, and the model of the vehicle has influence on the cost of insurance. The cost of insurance will be high if the automobile is having expensive replacement and repairing the same is complicated.

Territory rating: Only the state rating territory determined the insurance premium amount. The cost of insurance differs from location to location depending upon the number of claims made.

Classification of driver: It is based on the age, gender, marital status, driving habits and driver records. Generally drivers whose age is under 25 and over 70 meet with more accidents, therefore the insurance premium for them are higher.