Auto Insurance Premium Facts

Here are the auto insurance premium facts about where are money goes that we pay to the insurance companies. Many people think that they put it in the bank and let it sit to collect interest. This is partially true, as some of the money that is used in day-to day activities, is in readily available accounts.

However the majority of the money is invested. Yes the insurance companies invest all of our money. Most of the time these are low-risk investments, usually government bonds.

The reasoning behind the investments is to make money on the investment in order to cover all claims, keep the premiums down, and ultimately make more money. The insurance company insist that if their investments make lots of money, then they will lower the premium rates, however that is hard to believe. Since there is no way to tell how their (really OUR investments since they are using our money) investments are doing. But they can’t be doing poorly every year, and I have yet to see my premium get smaller for no reason, I have seen it get bigger however! 

Author: Erik Gray