A car insurance premium, also sometimes referred to as the car insurance rate, is the amount of the payment that is required for an individual's car insurance policy. Car insurance policies are often broken down into six month terms, so the car insurance premium is the payment that is due every six months in order to continue coverage. Some car insurance companies allow subscribers to make more frequent payments per year, such as quarterly or monthly, to avoid getting a huge bill in the mail every six months. If an individual does not make his or her insurance payments on time, any defaulted premium that accrues will be referred to as the "earned premium," and is required to be paid even if coverage is dropped.
A car insurance premium can vary widely depending on a number of factors, not all of which are in the driver's control. Each driver in the United States is required to purchase car insurance for his or her vehicle; it is illegal to drive without car insurance. Unfortunately, it can get fairly pricey, particularly if one has a poor driving history. Accidents, speeding tickets, age of the driver, and even a poor credit history are all factors that can increase one's car insurance premium, as well as the make and model of the vehicle. In addition, car insurance companies are free to adjust the premium at any point; though it may drop at regular intervals if one has a safe driving history, it can increase drastically with even a single violation, and some companies will drop coverage altogether.
There are ways to reduce a car insurance premium as well. These include increasing deductibles and reducing coverage limits. This can be dangerous, because it essentially increases the amount that an individual will have to pay if he or she is involved in an accident, but it can be a way to save money. People who choose to reduce coverage and increase deductibles should be sure they have enough funds in a savings account to at least cover the deductible if something should happen. This is often referred to as "minimum coverage."
As long as one's driving history remains relatively steady, car insurance premiums should not change much throughout the years, though it can be helpful to shop around and look at different policies to find less expensive options. The car insurance company is then required to pay for issues that occur while coverage was in effect and fully paid for, but they are not required to renew a policy every year. A car insurance premium is one of the most important regular bills that should always be paid.