5 things that affect your car insurance
It's a question many have asked, "How do they calculate insurance premiums?" Well, here are some informative answers to clear up any misunderstandings.
When it comes to car insurance, it may be hard to understand the numbers and how everything is calculated and how the numbers affect your insurance cover. However, you must remember that the numbers added up by car insurance companies are carefully calculated. By making use of information such as your claims history, car insurance companies use calculations and algorithms to make an informed guess on how much you are likely to cost the insurer. Based on the outcome of the results, the insurer can deduce whether you are high risk, meaning you may pay a higher premium, or low risk with lower car insurance premium payments.
Car insurance companies also use risk factors to determine a client’s payment upkeep. These risk factors may include your age, gender, credit history, vehicle type, driving record and years of driving history. Each factor is assessed differently and may affect your vehicle insurance premium. For example, your gender does not necessarily affect your claim probability compared to your overnight parking location.
Below are 4 major factors that could affect your car insurance:
- Location
Your residential location or where your car is parked overnight plays an important role when it comes to your car insurance premium payment. If you live in an area that is highly populated or has a high rate of crime involving stolen cars, the insurer may set a higher premium on your car insurance. If your daytime address (most probably the area in which you work) is in an urban area, this means that there is a greater risk of you having a motor vehicle accident than if you lived and worked in a remote location – thus increasing your chances of having a higher premium.
- Driving experience
Inexperienced drivers are considered a higher risk by insurers. Basically anyone without a credible driving history is likely to pay high premiums. Whether you are 16 or 40 years old, if you haven’t driven a car or have no record of previously owning a car you are seen as inexperienced and a high risk driver according to car insurance providers. The more years you have as a driver, the better your chances of scoring a low car insurance premium.
- Claims record
Although you might be a seasoned driver, car insurance providers also look at your claims history reports that you might have made with other insurers. This can have a positive or adverse outcome on your future vehicle insurance premium payments. If you claim three or four times within one calendar year, car insurers will probably see you as a high risk and may decide to hike your premiums or terminate your policy at the end of the term.
- Vehicle type
The type of car you drive also affects your insurance premium rates. Besides the vehicle model, other additional factors that affect your insurance premium are;
- The price at which you want to insure your vehicle at
- The vehicle’s average theft rate
- Cost of repairs (parts and labour)
In essence, maintaining a clean driving record, good credit score and choosing the right cover for your vehicle will ensure that you get the best deal out of your insurance policy. Get car insurance quotes online now!
