Insurance companies operate a lot like banks. After all, they are lending you credit, sort of. If you’re insured, you’re more likely to participate in risky events, like driving faster than the speed limit, or not paying as much attention on the road.
Another risk is the adverse selection risk. This basically means that the most likeliest person to get into an accident is the one that’s going to take out insurance. They do a sort of screening process, in which they basically look at your driving record, your age, previous claims, and what car you are insuring. Older cars or heavy made out of thick metal or big, heavy-duty are more likely to have smaller insurance premiums than a brand-spanking new Jaguar. Geographical areas also play a role. For example, a place in which the roads ice a lot are going to have higher premiums than in places where they don’t, how likely are you to get your car stolen, etc.
There are several types of insurance policies, such as collision, comprehensive, and liability. Collision policies protect you from collisions. Comprehensive insurances covers other types of damages, such as theft, malfunctions, etc. Liability insurances give you protection in case you crash and hurt the other driver.
The final thing I’m going to mention is that property taxes on cars are incredibly common, and that property taxes on older vehicles tend to be lower than that on newer ones.
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