Factors that Determine Car Insurance Premiums

Have you ever wondered why different people pay varying amounts of insurance premium even if it is for the same make and model? This is because there are a number of variables that insurance companies take into account when calculating the quantum of premium payable. It depends on where you live, what you drive and even how you drive. In a nutshell if in the eyes of the insurer you have a higher risk assessment than say, your neighbour, you will have to naturally shell out more.

Here are some of the factors that govern how much you pay for car insurance.

  • Where you live – If you live in an area that reports more thefts and incidences of vandalism you are liable to pay more. Another aspect is whether your location sees more crashes on an annual basis. Because of these aspects it is seen that people living in urban areas pay more car insurance than their rural counterparts.
  • What you drive – Before you head off to buy a car, do some research on their safety ratings. Vehicles that offer higher driver and passenger protection have lower insurance premiums. Ditto is the case with cars that have fool proof anti-theft systems installed. Insurers analyse massive amounts of data every year regarding crashes that have taken place and other industry safety norms of car makes and models before arriving at a premium amount.
  • The amount of deductible – In every State there is fixed aspects of insurance that are compulsory and additional coverage that is not necessary under law. If you take additions to what is mandated, the premium will be more. Further, deductible you choose also determines the premium. A higher deductible means lower monthly payment and vice versa. Also, look for a single insurer for your multiple insurance requirements. Take both car insurance and home insurance from the same company and it is likely that you will be offered some discounts.
  • How you drive – Your driving record has an impact on the premium. Drivers with crash-free driving over several years at a time are offered discounts by insurance companies. This of course is for the owner driver only. It is not applicable if you have for example hired a driver from First Personnel, one of the leading labour hire companies in Melbourne. However, even if you have had a crash in recent years you can rewrite the history by driving carefully and regaining your past record after several crash free years. You can start claiming your discount again.
  • Miscellaneous factors – There are other factors too. Your credit history is one of them as insurers take it as predictive of future claims. A good credit history means a lower premium for you. Male single drivers often have to pay more as insurers have found that crash rates are more in this category. Younger drivers who have taken safety courses in driving are offered discounts by some insurers. Further, if you have multiple vehicles and you insure them all from the same company, you will be offered a rebate on the total amount.

These are some of the factors that determine the quantum of car insurance. It is always advisable to discuss the various aspects with your agent first before handing over the premium cheque.

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