The Most Effective Way of Calculating Car Insurance Premium
You’re planning to buy a car and hence prior to that searching for good car insurance. However, do you know how to calculate the premium or what are the factors insurers consider to arrive at a premium amount? This is important to ensure that your premium is fair and just and thus avail the lowest premium and get great coverage.
Further, you can browse through important aspects which affect the calculation of car insurance premium on your vehicle.
Source of income
How one earns his living impacts his cost of premium. Certain insurance companies consider certain jobs as linked with higher risk of claims. Hence, check these details in the policy.
Car type- security features of the car will save you from higher premium
Expensive vehicles require greater costs for replacement of stolen parts or damaged parts. Therefore, higher premium is required to pay for such vehicle owners. This can be reduced by having your car equipped with high-end security features.
Age of the driver
The age factor plays a vital role to decide your premium amount. Research states that young drivers are more likely to face accidents and hence make repeated claims than older age groups. The bracket seen to have witnessed higher paying of premiums is 16-24.
Nevertheless, clean driving records over a period of time can avail you discounts on your premium.
One’s place of residence also affects his premium amount. If one stays in a locality prone to frequent accidents, then he’ll require paying higher premium. Same is the case for areas with higher crime incidents.
Past Driving conduct
The driving records will also help you to determine how much premium you might have to pay. Clean driving records with no major accidents will give one the benefit of lesser premium.
Past conduct of claims
When you apply for insurance, your insurer will review your claim history over the past 5 years. If there are frequent claims then this will increase your premiums.
If you haven’t made any claims over a period of 1 or more years then you will receive a no-claims bonus or NCB.
Car insurance policy type
Comprehensive car insurance will require the insured to pay higher premium than in the case of third-party insurance or such specific insurance.
This is because, in the former, the insurer will have to insure you against greater range of events covered in the comprehensive policy.
Number of people entitled to drive as per the policy
The name of drivers as stated in the policy also affects the premium amount. For instance, for an experienced who shows clean driving skills, he will have to pay lower premium. Conversely, it’s the other way round.
P.S. - Different insurers treat these factors in different ways. So it’s a good idea to shop around and get quotes from a wide range of providers and purchase one which offers the lowest premium and greater coverage.