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Nov 5 2017

How is car insurance calculated? #used #car #parts

#car insurance premium calculator
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How is car insurance calculated?

There are a number of factors that are used by insurers to set the cost of your insurance it s worth knowing what these are.

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Ultimately, the amount charged by an insurance company is a reflection of how likely a driver is to make a claim – and how expensive that claim is likely to be.

Different insurers treat these factors in different ways. So it s a good idea to get prices from a number of insurers to make sure you re getting the best deal.

These are some of the main factors that help to determine how much you pay:

1. Your age

Age is one of the more significant factors that insurers use. Statistically, younger drivers have less experience at the wheel than their older counterparts, and so are more likely to be involved in an accident.

This means that drivers aged between 17 and 25 generally face the highest premiums. The crutch here is that it s a factor you can t change.

It s widely believed that drivers who hit 25 years of age instantly get lower insurance prices. This isn t always the case, but there are other ways for young drivers to lower their costs.

2. Your occupation

Certain occupations mean that you spend more time in the car, carry important equipment with you, or work in high-risk areas.

It stands to reason that these kinds of occupations carry higher premiums than, say, a chartered accountant.

Due to the statistical nature of insurance pricing, occupations that are very similar may have a noticeable difference in price.

For example, being a company director may turn out to be more expensive than director of a company .

This is why it s important to be as accurate as you can when describing your occupation.

3. The car you drive

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As you d expect, the kind of car you drive has a large bearing on how much you pay for your insurance.

There are a few things you need to keep in mind when looking at this:

Value

The more expensive your car, the more it d cost to replace if stolen or written off in an accident.

Pricier vehicles may also cost more to repair, particularly if they re rare, and have expensive spare parts.

But don t assume that just because your own car isn t worth much, it ll be cheap to cover.

Insurance isn t just for damage to your own vehicle – it also protects other road users against accidents you might cause.

Power

The faster and more powerful your car is, the more likely it is to be involved in an expensive accident. So the larger your engine, the higher the insurance costs.

Modifications

If you modify your car to make it more powerful, you should inform your insurer.

It ll probably increase your premium, but if you don t tell them, your cover could be invalid if you make a claim in future.

Desirability

If you own a particularly desirable car, your insurer may consider you at greater risk of theft. Improving your vehicle s security can help offset this that or get an uglier car.

4. Where you live

Your postcode also has a bearing on the cost of car insurance.

If you live in a built-up area where the risk of accidents is greater, you ll pay more. The same applies if you live somewhere with high levels of vehicle crime.

This can vary even between nearby postcodes. A car two streets away may have significantly higher prices because it s near a particularly dangerous stretch of road, for example.

5. How you use your car

If you use your vehicle for commuting, you re likely to pay more for cover, as you ll be driving more when the roads are busy.

Your annual mileage also has a bearing. After all, the more you drive, the more likely you are to be involved in an accident.

6. Your driving record and no-claims bonus

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Have you made any claims? Do you have any points on your licence? These are significant factors in calculating the cost of car insurance.

When applying for insurance, you ll be asked for details of any claims in the past five years. Even if you weren t at fault, the claim will still probably push up your premiums to some extent.

If you haven t made any claims for a year or more, you should have some form of no-claims bonus (NCB).

Most insurers will accept up to five years of NCB, which can help reduce your costs.

7. Your excess

The higher the voluntary excess you agree to, the less your insurance tends to cost.

This is because you re shouldering a greater amount of the risk. Any potential pay-outs from your insurer are reduced, and low-value claims may be uneconomical for you.

On the other hand, if you choose no voluntary excess, an insurer will have to pay the full amount – minus compulsory excess – in the event of a claim. Therefore your premium will be higher.





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