We all want to find the best deal on car insurance. It should be cheap and cover everything that we need car insurance to cover too. Car insurance calculators are often used. In the old days, a car insurance calculator used a small number of elementary parameters. However, today, companies have advanced greatly in calculating car insurance, using complex parameters. Read on and find out what influences your premium.
Because car insurance is complicated, we advise readers to consider this article as only information. If you are interested in purchasing car insurance, please consult a certified, financial advisor for professional advice.
What value do car insurance companies give your car?
Insurers mostly provide cover based on the car’s ‘market value’.1 The market value is the average of the trade-in value, which is the lowest, and the retail price, which is the highest.
What is meant by trade-in and retail prices?
A trade-in price is what a dealership offers to take off the purchase price of a new car when you trade in your old car. The price is set by the dealership. A retail price of your car is the average price that a dealer will sell your car for. Insurers provide a discount if you insure your car for its market value.1
The make and model of your car affects the premium
It’s a no-brainer that the value of the make and model of your car will greatly influence the premium. A premium to insure an expensive, luxury SUV will be a lot more than one used for insuring a small city car. Some cars are expensive to maintain, due to expensive spare parts.1 Other cars are more sought-after by thieves and hijackers. The insurer bases premiums on data from claim histories of all the various makes and models.
What about the age of your car?
Usually, the older your car, the less its market value, and the lower will be the premium.1
Cover for sports cars is expensive
Insurance is all about risk. The higher the risk to insure a particular car, the higher the premium. Fast sports cars with young drivers are at greater risk of having an accident compared to an adult driving a standard sedan. Thus, premiums for the former car are considerably higher.1 Conversely, if the risk is decreased by adding safety features to a car, the premium could be lowered.
Your choice of car insurance type affects your premium
Should you choose to cover your car with comprehensive car insurance, the premium will rise steeply. The reason for this is that your car is covered ‘comprehensively’ or completely, and hence the higher premiums. Third party car insurance provides limited cover and thus has a lower premium.1
Consolidating your policies with one insurer
Some insurance companies discount your premiums if you have other policies, such as life insurance, with them as well.1
Your driver profile is most important to the insurer
You can do nothing about calculations based on the following parameters because they represent who you are.1
Why is your age important?
Again, it always comes down to risk. Young drivers, especially those below 21, are considerably less experienced and thus pose a greater risk on the roads compared to adults who have had many years of driving experience. Thus, young drivers have to pay a higher premium compared to older drivers. Be honest and fully inform the insurer who is the regular driver, to avoid possible rejection of a claim at a later stage.1
Young male drivers post a greater risk than their female counterparts
Statistics show that young male drivers under the age of 25 are at greater risk and are thus charged higher premiums compared to corresponding female drivers.1
A good education helps
Drivers who are professionals in science, medicine, engineering, and so on, statistically pose a low risk. As a result, insurers offer them discounted premiums.1
Are you single or married?
Insurers have found that, statistically, married drivers are less risky compared to single drivers, and thus are offered discounts.1
Your driving and claim profile
Drivers that have hardly claimed anything over several years are considered low risk and thus qualify for lower premiums, and no-claim bonuses. Drivers who start off with no driving history are initially charged higher premiums.1
Where do you live and work?
Some insurance companies raise premiums if policyholders live and work in risky and maybe dangerous areas.1
Making your car more secure helps
By adding security features to your car such as anti-hijack and tracking systems will reduce risk and premiums.1
Are you using your car for business purposes?
Using your car most of the time for business means you travel more and are thus exposed to greater risk. This means the premium will go up.1
What is your excess?
The higher the excess, the lower the premiums are likely to be.1,2
Your credit record matters
Insurers prefer offering lower premiums to those drivers who are responsible with their finances.1
Other benefits that are part of the policy
Benefits such as 24/7 roadside assistance may be part of your premium. You can lower your premium by canceling them but think carefully before you do so.
Have you considered covering your car with PMD’s cheap car insurance?
Now that you have read all about what affects car insurance premiums, make sure your car is adequately covered by buying cheap car insurance products with PMD (Prime Meridian Direct). It’s easy and quick – just go online with PMD’s Online Insurance Purchase Platform. You can do this at any time of the night or day, and make use of a call-back facility if you want to. Audio and video material are provided for extra assistance.