What determines your car insurance amount?
Choosing a car is one thing but getting insurance for it is another unforeseen expense.
Although you want that flashy sports car, expensive family SUV or that 4×4 for all your favourite outdoor activities, be careful of the insurance rates.
There are a variety of different things that insurance companies look at when putting together your car insurance rate.
Here are some things that will influence your premium amount:
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Demographics
Your gender, age, marital status and location all play a big role in your insurance rate. Insurance companies also do financial background checks to form an amount that is affordable for you. If you live in an area that is known for crime, you will usually pay higher car insurance in those smaller towns and rural areas. Big cities are just as prone to theft and vandalism as other towns, so before you let your car stand outside, be wary of your surroundings.
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The car you drive
The type of car you drive, along with the condition it’s in, plays a large role in your insurance amount. More expensive cars will attract higher rates as they are more expensive to maintain. Should these cars get into an accident or get stolen, it is a lot more expensive to repair or replace. How this amount is determined is that the insurance provider will generate a list of amounts, based on recent customer claims. From this, they will be able to see the location, what car it was and how the incident happened. Some companies increase your rate even though you might not own a new flashy car. If they find that your specific model and year is more prone to accidents, they will charge you a higher rate. So, as much as you want that new, gorgeous-looking vehicle, be sure to do your research before making a decision.
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How far or how often you drive
Be it for business or personal use, the amount of mileage on your car can influence your payment. The more kilometres you drive in a year, the higher your chances are of paying more. If this is you, perhaps you should consider ways to decrease your rates or simply other transport solutions. If, by any chance, this is your first car and you are looking to purchase something that is affordable and won’t cost you an arm and a leg on insurance payments, search for ‘used cars for sale near me’ and you’ll be able to find something that is both affordable and safe, as well as an insurance company that will be able to assist.
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Inflation
As the cost everything in life increases annually, so does car your insurance. Why? Because repair and maintenance costs become more expensive, therefore your rate gets bumped up. Irrespective of the age of your vehicle, everything else increases which in turn affects your payment.
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Your driving experience
Depending on the amount of time you’ve spent on the road, the more or less you will pay. If you are under 25 years of age, naturally you will pay more, because statistically, younger drivers are more prone to accidents. Older drivers are less likely to get into an accident and therefore have lower-priced premiums.
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Your driving record
It’s a no-brainer that your driving record is one of the first considerations. If you’ve been in one, or many, accidents or bumper bashings, the more you will be charged. If you have been in an accident before, but you’ve been crash-free for a long period of time, your payment amounts will decrease. Once again, this is measured according to your age, car and gender.
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Security measures
Individuals must not think that if you pay for insurance, no matter what happens to your car, they will cover the damage or losses involved in a specific incident. People still need to protect their vehicles and treat them with respect. If your car has an alarm system or a tracking device, your premiums will reduce because you are making a concerted effort to look after your car. Also, if something happens to your car, everything from the way it’s parked to the location and other risk profiles are all determined before any decision can be made on the amount that will be paid out.
Final words
At the end of the day, it’s not always about the low-cost insurance payment that you get. There are so many variables that contribute to the amount you pay, some of which you’ve never considered before. As much as insurance is an additional, unwanted cost, you also need to remember that the cheapest option isn’t always the best option in the long run. Saving on insurance doesn’t ensure that you are going to get the upper hand out of any unforeseen situation that could happen to your car. So, before you make a decision on what you want or are willing to pay, make sure it’s going to cover what you need.