7 Factors That Determine The Cost Of Your Car Insurance
Monday, July 15, 2019, 6:00 PM | Leave Comment
Getting your car insured is a critical element of owning it because it gives you coverage against the risk of accident, theft, and vandalism.
But shopping car insurance is not as easy as it sounds because you may want to compare different providers to get a policy that offers optimal coverage at the best price.
Before doing so, you must understand the factors that determine the cost of car insurance. This will help you in making an informed decision and choosing a plan that lowers your premium but gives the best possible coverage.
Here are the factors typically considered by insurance companies while calculating the cost of a policy.
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Geographical location
Your geographical location is probably the first thing that the insurance company would want to know because it determines the likelihood of accidents and thefts. Obviously, densely populated areas are at high risk as compared to rural areas, which translates into higher insurance costs in the metros and urban areas. Another reason could be the higher cost of repairs in urban neighborhoods, which translates into a need for greater coverage.
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Gender and marital status
Since accident statistics differ for males and females, gender is another vital factor that providers consider while insuring a vehicle. Cars owned by males are typically subjected to higher premium values because men drive more miles as compared to women and they also tend to exhibit more aggressive driving behavior. However, the rates for older men and women end up being comparable. The rate goes down for married people because they are more careful while driving.
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Age
Undoubtedly, the age of the driver also has a far-reaching influence on the probability of accidents, which directly affects the insurance value of the vehicle. According to Justin Kimball from PreszlerLaw-NS.com, drivers who are underage are more likely to cause an accident than experienced drivers. They may indulge in rash driving and risky behavior due to sheer immaturity and lack of experience. So you obviously have to pay more like a young car owner. Also, the cost goes up if you have youngsters in the family.
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Driving activity
Some insurance providers also use your driving activity as a basis for calculating your insurance rate. Business commuters, for example, are likely to be on the road more often and may have to pay more because the probability of accidents is higher for them. On the other hand, you may have to pay less if you seldom drive or take public transport to work. This is something that you would have to validate at the time of taking up the policy.
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Driving history
Another factor that plays a key role in the determination of car insurance cost is the driving history of the owner. If you have been involved in accidents, made insurance claims earlier or received tickets, you will be asked to pay more as compared to someone with an untarnished driving record. In case you have a very poor record, some companies may even refuse to give you insurance. However, older records are usually considered less important and the insurer will be more concerned about the recent ones.
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Vehicle safety rating
Besides the driver-related factors, there are certain vehicle-related factors that are also taken into account while calculating the insurance value. Owning a car that has a high safety rating gives you a clear advantage because the chances of accidents and injuries are lower. This is also a plus point for the insurance company and it will charge lesser for ensuring your car. Safety ratings are decided on the basis of factors such as the model’s track record and features like airbags, traction control, and automatic seat belts.
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Age of the car
The age of the car is as important as the age of the driver while determining its insurance cost. Older cars are more likely to be totaled in accidents, which means that the owner would discard it rather than pay for repairs. With newer cars, however, they would want higher collision coverage. This means that the premium of a new car is higher. If you own an old vehicle, you would probably drop collision coverage to save up on the premium.
It is important to note that the provider considers these factors in combination, rather than a singularity while calculating the insurance cost of vehicles. As an owner, you can also understand how they would influence the amount of premium you will have to pay to get optimal coverage for your vehicle. Being aware helps as it can help you in comparing different options and making a wise decision.
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