Factors Affecting Car Insurance Rates

Insurance companies provide insurance to car motorists depending on risk modelling techniques. The key question that the car risk model answers is, how likely is it that this specific customers will make a claim? Today, the auto insurances have streamlined their risk modelling technique.

The hard tasks remaining is usually to determine the risk classification of an insurance applicant in order to get the correct level of premium to charge. However, the main determinant factor is the value of the car. Below are factors that affect insurance rates.

Type of Insurance Covered

The type of car insurance cover that you need plays a significant role in determining the amount of premiums you pay. For instance, comprehensive covers attract the highest premiums because it insurers you against a wide range of risks. Other policies such as fire and theft are cheaper than the comprehensive car insurance cover.

But this type of policy does not cover you from accidental damage. The third party insurance cover will only cover you from liabilities arising from third parties affect6ed by an accident involving your car. So, it’s important you understand your coverage needs so that you can understand how they calculate premiums before settling for cheap car insurance.

Age of The Driver

Age is the most considered factor when it comes to insurance policies. The age of a driver is a strong predictor of whether the policyholder will make a claim. Younger customers tend to be the riskier customers.

This may be because of their inexperience on the road and so they are more likely to cause road accidents. Most insurance companies are very cautious with drivers under the age of 25. As a matter of fact, not everyone under this age is a risky customer but this age bracket is riskier than the other ages.

Bottom line

Finally, the biggest factor in determining auto insurance costs is the insurance company you decide to go with. Rates vary from company to company and while there are other factors that comprise your driving profile, you might be paying too much for car insurance simply because the company is too expensive.

Stella Tennant

Stella Tennant has helped several global brands, which get heard across the digital space, through result driven content & social media marketing efforts. Studying blockchains and cryptocurrencies makes her hopeful of a free and decentralized future.