After buying a car, the path to ownership generally doesn’t end there. One important – and necessary – step to vehicle ownership is getting car insurance. Before you sign up for a car insurance policy, it can be helpful to understand the many factors taken into consideration by the company when they calculate your car insurance costs. This can help you to ensure the cost to cover your vehicle are as low as possible.
Ultimately, the amount you have to pay the insurance company is based on how likely a you are to make a claim, as well as how costly that claim is likely to be. Keep in mind, different insurers have different methods for determining the risk factors, so it’s advisable to get quotes from a variety of different car insurance companies before you make your decision.
The following factors are considered when calculating how much car insurance costs:
1. What’s your age
If you haven’t made any claims in the past or don’t have any points on your license, insurance companies have very little information to use when determining whether you’re a cautious or reckless driver. Thus, when determining how much your car insurance will cost, insurers use statistical data derived from previous customers in your age group. As it is statistically shown that younger drivers are more likely to be in accidents, younger drivers (between age 17-25) generally have the highest premiums.
2. Where do you live
Your postal code translates a lot of information to car insurance companies. If, for example, you live in a highly congested area, your chance for having an accident increases. Additionally, if you live in an area with higher crime levels, your risk is also higher.
3. What is your occupation
Some jobs are statistically shown to carry higher risk of filing a claim. Insurers consider this as well when determining how much it will cost for car insurance.
4. How will you use your car
Those who plan to use their car for commuting to work may have higher car insurance costs. Insurers figure that you’ll be driving during a time when roads are busy, thus increasing the risk of an accident. On top of this, the number of kilometers you plan to drive each year are considered. For the more you drive, the more chance you have to be in an accident and file a claim.
5. What kind of car do you drive
As one may expect, the type of vehicle you’re insuring plays a role in determining car insurance costs as well. The following elements are considered:
- Vehicle Value: If you drive an expensive car, it would cost more to replace it if it is involved in an accident with total loss or if it’s stolen.
- Repair Costs: Expensive vehicles usually have expensive repair and spare parts costs. But so do older cars where the parts are harder to find. Keep this in mind as well.
- Max Power: More power = more speed. Cars which can drive fast are statistically more likely to get in an accident. Additionally, with higher speed accidents, you have higher amounts of damage (a.k.a. higher repair costs).
- Theft Desirability: Car thieves prefer certain vehicles. If yours happens to be one of those, you may end up paying more for car insurance. One can usually offset the higher rates by adding security features to the vehicle.
6. Checking your driving record
Do you have a history of making claims or points on your license? Even if you were not at fault in an accident, your premiums can still go up based on your car insurance history. This translates positively as well. If you have a clean record, you can often benefit from no-claim bonuses.
7. How high is your excess/deductible
The excess/deductible you select for your plan is the amount you choose to pay out of pocket per claim. For example: if you choose a plan with a €250 excess/deductible, and you make a claim for €1000, the insurance company will pay the remaining €750. The higher the number, the lower the cost of your monthly car insurance payments. This is because you’re volunteering to carry a higher part of the costs when you make a claim.
8. What type of coverage will you buy
Comprehensive insurance (full coverage) costs the most. There are several less expensive tiers to choose from, though they cover less. Third-party, liability, fire and theft are a few.
9. Who else will drive your car
Depending on the additional drivers you add to the policy, the price can increase or decrease significantly. The factors discussed in the article will be considered for them as well. Adding an experienced, cautious driver to a young driver’s plan can lower the costs, and vice versa.
10. Gender is no longer considered
While statistics show that women are less likely to be in serious accidents than men, this information is no longer allowed to be considered when determining the cost of car insurance in Europe. This has resulted in a relative increase of female drivers’ insurance premiums since 2012.
Source : .carfax.eu