Factors That Determine What You Pay as Car Insurance Premium
Car insurance premium pricing can be a confusing subject for many of us. It seems unfair, for instance, when you go shopping for car insurance with a friend, only for what they are charged as car insurance to turn out to be as low as a half of what you are charged for the same product, and from the same provider. The truth of the matter though – and this is something you should expect almost universally – is that car insurance premiums charged vary considerably from person to person, even within the same car insurance company.
To understand why it is that car insurance premium prices vary from person to person, we have to appreciate the basic fact that insurance is supposed to be a ‘hedge’ against the risk of car accident (and perhaps car theft and similar risks). Now in working out what to charge the various people who seek to buy car insurance from them, car insurance providers try to work out what the probability of the different people suffering the different events they are insuring against, especially the road accidents is, with the people who are at a higher risk of suffering from the same being charged for more car insurance than people who are at a lower risk of suffering the events they are taking car insurance against.
In working out your risk profile – the primary factor that goes into determining the rate at which they offer you their products at – car insurance providers look at a number of factors.
If you have a record of traffic-related convictions (even based on as ‘simple’ mistakes as obstruction and slight over-speeding), then chances are that you will find yourself paying higher car insurance premiums than drivers who have a record for being ‘obedient’ road users.
The very car you drive, too, can turn against you when car insurance premiums are being worked out. Some car models, as you will come to discover, have been noted to be more prone to accidents than others. And if you happen to drive on of the ‘higher risk’ cars, it should not come to you as a surprise when you find out that what you are paying as ‘car insurance’ is higher than what your friends driving ‘safer’ cars are paying. You can, of course, mitigate against the ‘high risk profile’ of your car by installing features like air bags and anti-lock brakes, which could see its risk profile lowered to be at par with the ‘safer’ car models.
A driver’s age, too, is another factor that car insurance providers take into consideration in working out car insurance premiums. With regard to age, younger drivers (and young here typically means bellow 50 years of age) are typically charged more in terms of car insurance premium than older drivers, since it has been observed that younger people tend to be more accident prone than older folks.
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