Factors That Determine Your Car Insurance Premium

By BankBazaar | July 13, 2016

Factors That Determine Your Car Insurance Premium

While paying the Car Insurance premium, one question that often pops into our heads is, “How is the premium calculated and what factors determine it?” Well, if you’ve been haunted by this question often, don’t worry! Like always, we have the right answer for you. Your Car Insurance is determined by a few factors (some of them might even surprise you).

Since getting your car insured is mandatory, you can’t find an escape route. You need to know everything about Car Insurance, and having a fair knowledge about factors that determine your insurance premium is one of the most basic things.

Here is a list of factors that determine your Car Insurance premiums:

  • Your driving record

If you are a rash driver with a bad driving record, your Car Insurance premium is more likely to be on the higher side than someone with a clean history. Thanks to your rash driving, your car is at a higher risk of meeting with accidents. Precisely why you’ll be asked to pay a higher amount. It’s never too late to start working on your driving skills. Start early, friend! It’ll help you save a lot.

  • The make of your car

Yes! Your ride can affect the premium amount too. With an expensive car comes a huge premium! That’s mainly because the spare parts and repair work cost considerably more when it comes to an SUV or luxury sedan as compared to a hatchback or compact sedan. Your expensive choices can cost you more. If your car is less vulnerable to accidents or other safety threats, you’re likely to get a concession on your premium.

  • The mileage of your car

The insurance premium of your car also depends on the miles it has covered. If mileage is less, it implies that you don’t use your car very often. That minimises the risk related to it and, therefore, reduces the insurance premium as well.

  • Purpose of your car

Depending on whether your car is a private or commercial vehicle, the insurance premium varies too. Since a commercial vehicle is likely to be used more and in harsher conditions, the insurance premium for them is higher as compared to a private vehicle.

Additional Reading: How to Keep Your Car Insurance Premium Low?

  • The safety features of your car

The safer your car is, the lesser you’ll have to pay as premium. This is when the year of manufacture of the car comes into play. The latest cars are usually well-equipped with all the necessary safety gear like airbags, anti-theft lock and advanced braking system. Therefore, they’re safer than old cars and hence their premium rates are lower too.

Additionally, the installation of ARAI-approved anti-theft devices can also lower your premium.

  • Your location

The registration zone of your car plays a great role in determining the premium. Depending upon the vulnerability of different areas, different vulnerability scores are assigned to different places. If your area falls in a more vulnerable zone that’s prone to more thefts and other damage, you’re likely to pay more. Due to this classification of different cities into different zones, based on their vulnerability levels, metro cities often enjoy a lower premium rate as compared to small towns that are more prone to vandalism and thefts.

  • Your demographics

Your age, gender and other factors like marital status play a significant role in determining your premium amount. For instance, unmarried, single men, who are less than 25 years of age are considered to be more vulnerable to accidents and therefore, are supposed to pay more. The same concept applies to a teenager too since they’re considered to be more risk-prone as compared to mature adults.

  • Your car’s servicing frequency

Since maintenance is an important factor that decides whether or not your car’s in a good condition, the frequency of your visits to the servicing centre matter. Now’s when those regular visits to the servicing centre and taking care of your precious four-wheeler will pay off! If you’ve been punctual about it, you’ll have to pay a lower Car Insurance premium. Yippee!

  • Your credit history

Yes! Your credit history can affect your Car Insurance premium too. It’s considered to be one of the many factors that help predict your future insurance claims. Maintaining a good Credit Score, therefore, is the key to getting a Car Insurance at a lower premium rate. And you thought your credit history only affects the fate of your loans!

We hope that you’re done making a note of things that determine your Car Insurance premium. It’ll help ensure that you’ve chosen the best insurance plan and will also help you plan your finances better.

Additional Reading: How To Change Your Car Registration

Have some other queries in mind? We’re here!

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.
Category: Car Insurance
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