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Insurance Pricing:How Do You Use Your Car?

As you go about shopping for car insurance, you may have found yourself puzzled as to how a car insurance company makes decisions in regard to the costs associated with car insurance premiums. Indeed, on the surface, there is a bit of a seeming mystery when it comes to the setting of car insurance rates by a car insurance company.

One of the factors that a car insurance company utilizes in setting car insurance premium rates is the manner in which the factor that the car will be utilized. Three different types of considerations come into play when the manner in which a person will use a car is contemplated by a car insurance company:

-- personal or pleasure
-- work
-- business

You do need to keep in mind that when it comes to car insurance, a car insurance company considers a number of factors when determining premium rates. How you use your car is only one of many factors the do have a bearing, a direct bearing, on how much you will end up paying for car insurance.

Car Usage: Personal or Pleasure

Generally speaking, if you utilize your car only for personal purposes, for pleasure, you will have the lowest premium rate as far as the usage factor is concerned. (Remember, there are many other factors that come into play when it comes to determining what your car insurance premiums will be charged by a car insurance company.)

Car Usage: Work

If you use your auto for work (but if the usage is not a part of your operation of your own business enterprise) you will pay a bit more for car insurance than you would if the car was to be used only for personal, non-work related purposes.

Car Usage: As Part of Your Own Business

The highest insurance rates that you can be charge pertaining to the manner in which your auto is being used is when you are using your car to further your own business enterprise. The thought is that you bear the biggest risk and liability in such a situation and, therefore, your car insurance company charges the highest interest rate for this type of motor car usage.

Summary & Conclusion

Once again, the usage issue is one of only a number of factors that a car insurance company takes into consideration when making underwriting decisions. (Underwriting decisions are those decisions that a car insurance company makes when it comes to determining how great of a risk you will be in regard to a car insurance policy.) By weighing and balancing these different and various factors, a car insurance company arrives at the amount that the company will charge you for a policy of car insurance.

If you have any additional questions about your car insurance premiums, you will want to contact your car insurance company, you car insurance agent or the insurance commissioner in your state.


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