Simply put car insurance requires you to pay a premium that provides you with coverage for the costs of damages or injuries resulting from an accident.

Before the insurer determines how much you have to pay, they take several factors into consideration. This includes your age- are you young, old or somewhere in between. Where you live- insurance is cheaper if you live in the country as opposed to the city. Your driving history- do you have ickets? The type of car you own- a sports car or SUV means higher rates. And potentially even your credit score. They also need to know the type of insurance you are requesting and the amounts of coverage.

Using all these factors they determine the risk that you represent to them for submitting a claim. This is based on comparing you to individuals they insure who have similar characteristics.

The final amount they come up with is your rate. You will have to pay this amount in advance or on some pre agreed timetable. This can be monthly, quarterly, semiannually or annually.

When you are requesting a quote for car insurance you need to consider what kind of coverage you need. This includes coverage for repairing or replacing the car, coverage for your injuries if any and coverage for any other person involved in an accident when it is your fault. This is known as liability and is required in most states.

Insurance companies also offer a deductible to help you reduce your rates. This allows you to pay a certain amount yourself before the insurance company begins making payments. The larger the deductible you select, the lower your rate will be. However, if you choose too large of an amount it may be difficult for you to come up with this when you have a claim to file.

When you file a claim the insurance will estimate the total amount you are owed. They will then reduce this amount by any deductible you have on your policy and issue a check for the balance.