Factors that Determine your Car Insurance Rates
Your car insurance rate is determined by a number of actuarial factors. Each of these factors is used to assess how much risk you present to the insuring company. The less risk you can put your insurer at, the better the rates you can enjoy. Here are some of them:
In the world of car insurance, the older one is, the lower their rates. Young people pay the highest rates while mature drivers get the most attractive rates.
Type of car
The car you are insuring will determine the
kind of rates you get. Some cars cost a lot more to insure than
others. Do some research before buying any car to find out what
range its insurance rates fall into; you will get a good estimate of
how much its cost of insurance will be on average. Insurance
companies look at factors such as the value of the car, speed limit,
engine power, safety features and cost of repair.
Indeed, colour too can affect insurance rates. Insurers believe that cars of a certain colour are likely to be involved in/ cause accidents!
Type of policy
This goes hand in hand with the amount of coverage. The more coverage your policy has, the more you pay. If you choose to purchase only the legal minimum required by the state, your rates will be much lower than someone who chooses a comprehensive cover.
What do you intend to use the car for?
Rates for personal use – driving to and from work, dropping and
picking the kids from school, running errands across town – will be
different from those charged on commercial usage. Obviously, the
kind of coverage for commercial use is significantly different from
that of personal use so this too affects the rates.
If your driving history is laced with points, convictions and claims, you will get high rates. A person whose record is clean on the other hand will get very low rates. When the insurer decides to take on a driver who has had a conviction in the past, they are running a big risk. The best they can do is protect themselves by charging him or her much higher rates.
Insurance companies give a range of discounts. You can qualify for a multiple policy discount, there are discounts offered through employers, association to certain clubs and charities among others. Check your eligibility for discounts as they can significantly lower your premiums.
No two insurance companies are the same. They may offer similar policies but the structuring will be different. Some companies are thorough in their service, others are haphazard. This explains the obvious difference in the rates they charge.
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