Why the rate of my car insurance is so high? Why do I need to pay more premium than my colleague who is of my age and has the same car? Well, these are some of the most common questions asked by millions of car owners when they make payment of their car insurance premium or make a purchase of the best car insurance plan.
However, the rates of the car insurance premium do not increase abruptly instead they are the result of a carefully thought-out calculation. The car insurance companies use your personal data and your previous claim data to analyze the rate of premium that you need to pay. In this way, there are various reasons that precisely affect the rate of car insurance that you have to pay. Here, we are discussing top 10 factors that affect your car insurance rate directly:
Number 1: Age: Yes your age plays a very important role in deciding the premium of your car insurance policy. The younger drivers have to pay a higher premium and this is because of the statistics that show that the rate of accident in younger drivers is more than the drivers of old age.
Factor Number 2: Type of Vehicle and Its Usage: Another factor that affects the premium of the car insurance plan is the type of vehicle and its usage. The more desirable and expensive vehicle you own the higher is the risk of its getting stolen and higher the repair cost. Moreover, if you are driving your car every day to your work then it has more chances of it to get into a collision than someone who is driving the same type of car only over the weekends. This means, despite the clear history of your car, you have to pay a higher premium if it has run higher miles.
Factor Number 3: Your Address: The garaging address of the vehicle also works as a deciding factor of its premium. The local crime rate of your area to the weather of your city everything is considered while finalizing the premium of your car’s insurance.
Factor Number 4: Marital Status: Your marital status is another deciding factor. This is because as per the statistics married people get into fewer accidents and get involve into fewer traffic violations than unmarried people. In this way, the premium gets lower if you are married and becomes higher when you are single.
Factor Number 5: Credit Score: Yes, you read it right. People with bad credit score get high-risk motor insurance rates. If you have a poor credit history, you have to pay a higher premium despite your good driving history.
Factor Number 6: More Policies from Same Insurance Provider: Most of the insurance providers offer different general insurance products apart from the best car insurance plan. So, if you have taken more insurance plans from the same insurance provider, then you may get car insurance at lower rates.
Factor Number 7: Cancelled Policies in the Past: Those who do not fulfill their current insurance term and cancel their policy prematurely create poor history in the insurance providers’ market. Generally, the insurance companies hesitate to cover you, if you have cancelled your insurance policy in mid-term. But, if any company covers you, it may give you its policy at higher rates.
Factor Number 8: Claims with Larger Payouts: We all take insurance plans to cover ourselves in case of a financial crisis such as car accident or ill health. However, if you make claims with big payouts, the insurance company may raise your premium in next renewal.
Factor Number 9: Deductibles: As per basic math, the more you pay from your pocket, the less is paid by the insurance company and hence the lower will be the cost of the premium. So, if you take insurance plan with higher deductibles, the lesser the premium of your insurance plan will be.
Factor Number 10: Driving Record: The people who have poor driving record have to pay a higher premium. On the other hand, people with good driving record generally pay lower premiums. So, this is another factor that plays a major role in deciding the premium of your insurance plan.
Final Words: So, the above mentioned are some of the factors that majorly decide the premium of your insurance plan. If you want to have the best car insurance policy at a lower premium rate, then you should understand the above factors before thinking about the premium rates that you are paying for your car insurance policy.