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Top 5 Factors That Affect Your Car Insurance Premium
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Sometimes, we do not pay as much time and heed to car insurance policies as we do for life insurance plans. While this is quite natural, you must know that such a mistake can lead to heavy financial losses.
Even though people are now changing and more and more individuals have begun opting for car insurance, most people from the upper and lower-middle-class sections in India are not aware of why their insurance premiums vary so much.
Knowing about such variations and the factors that cause such variations won’t just educate you about premiums. It will also help you address higher premiums and tackle them effectively.
Several factors like the age of your car, its model and your location can have a huge impact on the premiums you pay for your car insurance. Understanding these factors and learning about how they impact you can go a long way in saving you money.
Understanding Car Insurance Premiums
But what are premiums anyway? Premiums are the amount of money that you are required to pay for your vehicle or life insurance policies to keep them running. Premiums don’t necessarily have to be fixed. There are risk factors that can influence the premium amounts.
These risk factors are responsible for determining your chances of opting for a claim in a certain year. Based on the risk that the insurers are taking by covering you for insurance, your premium keeps varying.
Normally, your premium rates are to be paid either monthly, or annually. Once you understand exactly what factors can cause your car insurance premium amounts to rise, you will be able to comprehend how to shrink it. So, you can now be stress-free knowing that you aren’t paying more for the same insurance policy in comparison to someone else.
Driving History: How Your Record Influences Premiums
Driving history and insurance premiums are related. How you drive can increase or decrease the risk associated with covering you. If you are a clean and careful driver, insurers will want to work with you knowing that your chances of opting for claims are less.
But if you’ve regularly been someone with a rash driving record or have been charged with road safety rule violations or fines, things might become a little difficult for you. How you drive will determine the risk of covering you and thereby, impact your premiums too.
It is common behaviour to want to predict someone's future actions by studying their past record or behaviour. If you have been a clean driver, or if you have taken up defensive driving courses that teach you how to drive safely, insurers might see this positively. They might even end up offering you big discounts on your premium amounts.
If you wish to shrink your policy premiums, the first thing to do is to embrace some driving measures. These measures can range from driving slowly to obeying traffic rules. Once you do this daily, it eventually becomes a habit and awards you with better premiums and policy terms.
The Impact of Vehicle Type on Insurance Rates
The study of vehicles is a whole new science in itself. And the knowledge of these mechanical details can help you save a decent amount of money as well. If you are a luxury vehicle owner and your car has really expensive parts or engines, covering it can be tough for some insurers. This will thus lead to higher premiums.
On the other hand, if your car is armed with safety features and properties like anti-lock brakes or airbag systems, then even if an accident is caused, it is likely to cause less damage. Such features don’t just protect you in the event of an accident, they provide you better coverage at lower premiums or even discounts due to the lower risk involved. Thus, the impact of vehicle type on insurance costs is considerable too.
Furthermore, what model you have, its age, its engine type, the repair costs and theft likelihood also heavily influence your vehicle’s insurance premium. If your vehicle is a high-performance luxury car and is more likely to be stolen, then you will have to pay higher premiums accordingly. Again, if repairing your car can be pricy or expensive, this will cause you bigger premiums too.
How Does Location Affect Car Insurance Premiums?
Even if location isn’t a factor that you can control, there are some parking measures you can adopt to keep your car safe from accidents or theft to be eligible for better premiums. Location-based car insurance rates policy is employed by almost every insurance provider. Every area comes with different traffic requirements, accident rates weather factors and theft statistics. These regional elements can impact your premiums.
Age and Car Insurance Premiums
Age is also a factor that cannot be changed. If you are below 25 years of age, your insurer might see you as someone more likely to drive rashly and cause an accident. Again, if you are between 25-65 years of age, you will be charged lesser premiums.
However, if you are more than 65 years of age, your driving reflexes might be slower. This will cost you more premiums. Thus, younger drivers can take up defensive driving courses and drivers above 65 might take refresher courses to reduce their premiums.
Your car insurance premium isn’t just affected by one factor. There are several factors at play. Among these factors are your vehicle’s model, the engine type, the location you plan to drive your vehicle in, your credit scores and your past record in driving.
This is very much possible. Some simple measures can save you a lot of money. You can choose to park your vehicle in safe areas, make it theft-prone, use safety features and drive slowly to get lower premiums or even discounts.
Credit scores can make all the difference in the world when your insurance premium is concerned. This is the factor that determines how likely you are to miss a premium payment or to make your payments. Thus, your credit score will determine how risky your insurers find you.
Yes. Vehicles that come with safety features will cost you less premiums. On the other hand, vehicles that promise high performance and need costly repairs will cost you more premium rates.
Author Bio
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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