What determines the actual premiums for auto insurance?
1. Premium.
Is it true that a lower insurance premium will always result in poor benefits compared to a more expensive policy? What type of premium should I expect for my car?
You can ask for quotes from other insurers to compare rates. The following factors are used by most insurers to calculate the premium:
i) Driver’s age.
ii) Previous claim history and driving experience.
iii. Type of automobile, engine capacity, and date of manufacture.
iv) Types of coverage available
v) Other benefits or limitations
Driver’s age.
Drivers under 25 years old will generally be charged an extra premium. These drivers are considered reckless and inexperienced. Statistic shows that younger drivers are more likely to be involved in an accident. To feel the thrill of speeding, younger drivers are more likely to speed. Others may simply want to show off their driving skills.
Previous claims experience and driving instructions.
Experienced drivers can better assess road conditions. They can anticipate the situation and use it to help avoid accidents. The insurer can assess the driving habits and character of drivers by reviewing any previous claims.
Type and year of manufacture.
A family car, such as a sedan, or Multi-purposed vehicle(MPV), can be considered normal driving. This is in contrast to driving a high-performance car like the Subaru Imprezza and Porche 911. Also, the car’s capacity (cc), plays an important role. A car with a higher cc tends to have a higher insurance premium because the cost of repairs is more expensive than its capacity. The manufacturing date determines the car’s lifespan and spare parts availability. Japanese cars have easy access to spare parts because most parts can be interchanged and adapted with other Japanese car manufacturers.
Types of coverage available.
There are usually three types of Auto Insurance coverages.
Comprehensive coverage – This covers damage to your vehicle as well as third party vehicles. The insurer will pay all costs of repairs to your vehicle and those of third parties in an accident that you cause. The excess will be your responsibility. The excess is the amount that car owners must pay before they can start any repairs. This applies to all future medical care that may be required. The plan with the highest price tag is therefore the best.
Third Party Insurance – This plan is more affordable than the previous. The insurer will not pay for any damage to your vehicle or third-party vehicles caused by an accident. Your vehicle’s damages must be borne by you.
Fire and Theft Insurance – This policy covers only theft or fire that occurs to your vehicle. This plan is not popular with vehicle owners due to its limited coverage.
Additional benefits and limitations
Insurers have added benefits to their packages that go beyond the ones already mentioned. Some insurance companies offer life protection coverage. I have heard of some that offer $50000. The Auto Insurer will pay a lump sum of $50000 to the family in the event that an accident results in the death or permanent disability of the insured drivers.
An insurer may pay a set amount for the ‘Loss Of Income’ payment that results from accidents within a specified time frame. This is in addition to the previously mentioned medical claim.
Windscreen coverage is not provided by all insurers. Other insurers make it optional for vehicle owners, with a minimal added premium. Vehicle owners also enjoy the ‘Loss Of Use’ benefit. Vehicle owners are unable to use their vehicle if it is damaged in an accident. Vehicle owners can rent a replacement vehicle for a specified period of time while their damaged car is being repaired in the workshop.
Car owners should also ask their insurer if there are future premium ‘loadings’ for excessive damages. Loading refers to an additional premium that is added to the driver’s account due to frequent claims, high repair costs or both. Car owners may have difficulty insuring their vehicle if this happens as the data is shared between auto insurers.
No matter what your decision, make wise decisions. Make sure you only get what you need, and not what your heart desires. Even if you haven’t made any claims in the last 5 years, your premium for auto insurance could still go up because of other factors that are not under your control.
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