If you own a vehicle, you must be aware of how important it is to have car insurance. In case you get in an accident or your vehicle is damaged, an insurance policy is essential to cover the damages and any legal ramifications. Otherwise, you would have to pay for all these expenses from own pocket.
Don’t have the first clue about car insurance? Car insurance isn’t determined by insurance providers’ guesswork. When it comes to car insurance, there are a number of factors considered to calculate the premium. In this post, we’re briefly discussing the main factors that ascertain car insurance premiums.
- Location
An insurance provider will take your geographical location into account for calculating your car insurance premium. A heavily populated area or an accident-prone region is likely to shoot up the rate. This is why insurance premium is typically higher in metro cities than in rural areas.
- Age of the vehicle
The older your car, the lower is its value in monetary terms. This implies that older cars are much cheaper to insure than their newer versions.
However, it’s not the same for vintage cars. Car insurance for classic cars in the UK can be much higher than a brand new car. This is because the parts of classic cars are difficult to source, replace and repair.
- Driver’s age
It’s no secret that young drivers tend to be much more reckless when it comes to driving. New, young drivers are the riskiest drivers according to insurance providers. Therefore, the insurance premium rate for young drivers is generally higher and decreases as you grow older.
- Driving experience
Expanding the previous point, inexperienced drivers are more likely to get into accidents. If you’re a novice driver, insurance providers will impose a higher rate. So, if you’re a young and inexperienced driver, you will receive the short end of the deal as you would have to pay a hefty insurance premium.
- Vehicle make & model
The make and model of your vehicle also impact your insurance premium. Some cars have a higher theft rate, while some are prone to accidents. All these factors are considered to calculate your insurance premium.
Also, if you own an ultra-modern car with the latest safety features that won’t mean you will get a lower premium. On the contrary, this could be the reason for high value car insurance in the UK.
- Vehicle use
Insurance providers want to know your intended vehicle use in order to compute your insurance premium. For instance, if you use your vehicle for an everyday commute then the rate will be higher. On the other hand, if you just drive your vehicle a couple of times a week then the premium will be lower.
- Gender
Statistically, men account for 73% of all worldwide road traffic deaths, which is nearly three times the rate of women. Men are more likely to partake in dangerous driving practices including speeding and driving under the influence. This gives insurers leverage to charge a higher rate from male drivers than female drivers.
- Marital Status
Compared to single drivers, married couples are much safer and responsible drivers. Often insurance providers note your marital status to ascertain your car insurance premium. Being married can get you a lower rate.
- Driving and claim record
Your history of driving represents the risk you pose to an insurer. If in the past you’ve been involved in accidents or driving violations, you are likely to be charged with a higher insurance rate.
In addition to this, insurance also looks at your previous claims. If you’ve made multiple claims, you will be automatically considered risky by insurers.
- Annual mileage
Your insurance premium rate is directly proportional to your annual mileage. If you drive a lot, then you will have to pay a higher insurance premium.
We hope this post gave you clarity about how car insurance premiums are calculated. Remember to always do thorough research before signing an insurance policy.
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