How Are Car Insurance Costs Calculated?


How will your car insurance cost?

Simply put, the type of coverage you require (e.g. Fully comprehensive versus third-party coverage, and how frequently and how much you expect to be covered by your car insurance company.

In order to determine the probability of you filing a claim, insurers will review details about you and the car. These details will have a significant impact on the cost of your car insurance. These are the main factors car insurers consider when determining the price of your insurance premium.

Information about your car:

Car Value – The car you buy will cost more to replace and, in general, more to fix. The more expensive your car is, the more you will have to pay for insurance.

Car Power – The more powerful your car is, the more likely you are to be in an accident. This will increase your chances of filing a claim. It also increases the amount of the claim. Therefore, premiums for higher-powered cars are usually higher.

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Car Desirability – The less desirable your car is, the more likely it will be stolen. Insurers will charge a premium to replace a stolen vehicle. This is because it is expensive. For example, premiums for classic cars can be higher than usual.

About You:

Your age – Statistics show that younger drivers are at greater risk for an accident. Therefore, they will pay more insurance. The 17- to 25-year-old group usually has the highest premiums.

Your Job – Statistics show that some professions include higher risk individuals (e.g. students, journalists, actors etc.) This will affect the cost of your insurance.

Where you live – According to the rule of thumb, more people will be driving in urban areas. This increases the chance of an accident and makes it more likely that there will be more car theft. Living in these areas will also increase your insurance premium.

Storage and car usage:

Your claim history – Insurance companies believe that you are more likely than others to make a claim in the future. Many insurers offer a no-claim bonus that can help reduce your insurance costs.

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Previous Penalty Points- Insurance companies consider this a sign that you are high risk and will charge you more for your insurance than drivers with clean licenses.

Car Storage – Storing your car in a garage instead of on the street will reduce theft rates and lower the cost of insurance. This is especially important if your home is in an urban area where insurance companies will charge you more for the increased risk of theft.

Mileage – The more miles you drive, the more likely you are to be in an accident. Therefore, higher mileage policies will usually cost more.

Types of coverage:Third Party vs Third Party Fire & Theft / Fully Comprehensive – This is one of the most important factors that will determine how much insurance you need.

Voluntary Excess: If you’re willing to pay some of the initial costs for future claims, this will reduce both the number of claims you may make and the cost to the insurer. Therefore, insurers will offer lower premiums.

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Some of these things are immeasurable (like your age), but you can make changes to your lifestyle, such as how you store your car and how careful you drive. These factors can have a big impact on your insurance costs.