Auto Insurance Costs

Premium

A premium is the amount you pay to the insurance company to buy your auto policy. The premium covers the term or length of the policy. The term can be 6 months or 1 year. Most insurance companies allow you to pay the premium in installments. Ask if there is an extra fee for doing this.

Deductible

Some kinds of coverage have deductibles. A deductible is the amount you must pay before the insurance company pays anything on a claim. You usually pay a lower premium if you choose a higher deductible.

Example: Let's say that your Comprehensive coverage has a $500 deductible. If a storm causes $1,500 of damage to your car, you must pay the first $500. Then your Comprehensive coverage pays the rest-$1,000.

Limits

Each kind of coverage has its own limits. The limit is the total amount the insurance company will pay for a single accident or claim. The insurance company will not pay any costs above the limits.

Example: Let's say that your auto liability coverage has a $50,000/$100,000 limit on bodily injury for one accident. In this case, your insurance will not pay more than $50,000 for one person. It will not pay more than $100,000 for one accident.

Do I pay a fee to my agent or broker?

Agents are paid by insurance companies, not by you. If you work with a broker, you will usually pay a broker's fee. See Working with an Agent or a Broker, below.

Do all insurance companies have the same costs?

No. Costs vary, even in the same area. When you shop for auto insurance you should compare costs and coverage from several companies. See Shopping for Auto Insurance below.

I cannot afford my premiums. What can I do?

California has a Low Cost Automobile Insurance Program for good drivers who are income eligible. See our CLCA page.