Ever wonder how motor insurance companies come up with their rates and why there are different tiers of motor insurance premiums for the same vehicle?
When working out the price for motor insurance, usually known as the premium, insurers use details about your vehicle, personal details, and how you drive among other factors. This information is used to predict how much of a risk you pose and how likely you are to make a claim. If you walk away from a quote thinking, “why is my car insurance so high?” the answer is likely one of the data points is pointing toward you being a high-risk client.
If you have been in accidents or made previous motor insurance claims, the insurance company has learned that you’re more likely to make another claim than a similar driver who doesn’t have any blemishes on their record. Aside from auguring well for your life and health, safe driving history also matters in the determination of your premiums. The number of claims you’ve had matters. If you’ve had three claims in three years, motor insurance providers are going to see you as risky to insure and either hike up your rates or decide not to renew your policy at the end of the term. A few accidents and claims make you a riskier driver so insurers are able to charge you higher premiums.
Use of vehicle
Insurers also want to know why you’re driving your car. A vehicle used privately poses less of a risk than a vehicle used for business. Thus, personal use of a vehicle costs less than business use, since those using their car for business purposes have a higher chance of being in an accident due to increase driving time.
No doubt about it: inexperienced drivers pose more risk. Anyone who hasn’t driven a car is automatically a higher risk to car insurance companies, whether you’re 16 or 50 years of age. The more years of driving experience you have under your belt, the better. Even better for your wallet is if you have been licensed for many years and have a clean driving record. That combo will get you better rates, plus discounts for being a good driver.
Value of Vehicle
Costlier, and higher-performance vehicles will generally require higher premiums. Drivers should check their estimated premiums before buying a car to avoid getting stuck with insurance bills that are surprisingly high. You can easily get a quote from Best quote to avoid the hassle.
In summary, you just control what risk factors you can. Keep a clean driving record, purchase a vehicle whose insurance won’t break the bank, and choose the right coverages for your needs. Strive to keep insurance companies happy by posing less of a risk with the rating factors you can control, and in turn, your wallet will be happier, too.