Factors that Determine Car Insurance Premiums

As we all know, whatever you do in our life affects the rate of insurance rate you will pay. The same applies in motor insurance. The following are factors that will determine how high or low your insurance premiums will be, at the time of purchasing insurance cover.

Driving profile

Such factors as the number of kilometres you drive annually and your accident history are major elements in setting your insurance premium. The less you drive the less risk of an accident and a claim. Safer driving, meaning a history free of accidents, also points to someone who’s less likely to file a claim.

Type of Car

Car insurance premiums are based in part on the car’s sticker price, the cost to repair it, its overall safety record and the likelihood of theft. The cost of fixing a brand-new 22 million BMW 7-series is going to be a lot more than the repair costs for a used 1.8 million Toyota Mark X. The insurance premium you will be requested to pay will reflect this.

Personal information

Insurance companies base their premiums on actuarial information about drivers. They look for patterns of claims activity among people like you. A teenage boy is likely to attract a higher insurance premium than a middle-aged driver, because statistically, teenage boys have more accidents than do 40-year-olds. Employment or occupation also plays a role as it affects how much driving you do. Work that involves lots of driving, such as an outside sales job, can affect premiums. From the insurance company’s point of view, the more kilometres you drive, the more you are at risk of getting an accident. Insurance companies also look at where you live and park the car. They track local trends of accidents, car thefts, lawsuits and the cost of medical care and car repairs.

The coverage

The more coverage you choose and the lower the ‘excess’ you set, the more you’ll pay. If you want to lower your insurance costs, you can’t change your age, or easily change your job or hometown. However, there are some personal changes you can make:

Consider pay-as-you-drive

It’s an irony, but the more personal you get, the better your rates might be. Pay-as-you-drive programs offer better rates because they’re tailored to how you personally drive, as opposed to the people who are similar to you in terms of age or other unchangeable factors. This means that a teenager who is an excellent driver, who doesn’t speed, doesn’t drive at night and doesn’t drive many kilometres, can get a better rate than the average teenager. Pay-as-you-drive plans have different configurations, depending on the insurance company. Some require that you install a telemetric device that transmits information about your actual driving to the insurance company. A good example is the pay-as-you-drive insurance from Gateway Insurance.

Change your coverage

Don’t go for every bell and whistle in an auto insurance policy. If you’re willing to pay a slightly higher deductible, you can wind up saving big on your rates. If you have an older car with comprehensive and collision coverage, you might find yourself paying more in insurance than the car is worth. One tip is to take your comprehensive premium and multiply by 10. If your car is worth less than that amount, don’t buy the coverage. If you’re worried about being left overexposed, consider this: The typical policyholder makes a claim only once every 11 years, and reports a total loss only once every 50 years.

Explore discounts

The options available include discounts for low-mileage drivers, for seniors and for cars with anti-theft and certain safety devices. It’s a lengthy list just ask your insurer about any discounts, and go from there. Obtain quotations from at least five reputable insurance companies, before you buy auto insurance. An insurance company’s claims payments record should also be considered. Insurance companies don’t care if you’re female or male as long as you’re a safe driver. Their only worry is that a particular driver would not end up making or causing a pricey claim against them.


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