Calculation of car insurance premiums

emdadshab May 30, 2020
Calculation of car insurance premiums: Insurance companies consider several factors when calculating car insurance premiums. Knowing how your insurance premium is calculated pays off: you can find the protection that suits you, at the right price.

Here are the 8 factors that auto insurers look at most often:

1. Your vehicle

The brand, model, and year of your vehicle affect your insurance premium.
Your premium may be lower if there is statistical evidence that your car model is less likely to be involved in an accident or stolen. The premium can also be lower if the vehicle has better safety and driving characteristics or if repairs are less expensive.
Insurers also take into account the cost of replacing the vehicle if it is stolen or irreparable.

Calculation of car insurance premiums

2. Frequency of vehicle use

The frequency with which you drive could increase the risk of getting involved in an accident, which affects your insurance premium. Insurers, therefore, take into account the number of kilometers you drive each year.

3. The behavior for business purposes (and not just to get to your workplace)

If you use your vehicle as part of your job, you may need commercial auto insurance because personal auto insurance does not cover accidents, damage, or theft for a vehicle. Besides, your company may require a higher liability limit than is generally available in private car insurance.


4. Your driving record

Insurance companies use your driving record to determine the risk of your presence on the road. As a rule, the better you drive, the lower your insurance premium.

Here are the factors that insurers consider when analyzing your driving record:

  • The number of years since you received your driver's license
  • Any conviction for a driving crime
  • The number of accidents you have had
  • Any speeding
  • Remember, insurers also take into account the number of drivers who use your vehicle and their driving history.

5. Your place of residence

In Canada, the insurance premium varies depending on where you live. Auto insurance premiums are usually higher in and around large urban centers due to a higher number of accidents and claims for theft or vandalism.
In some provinces, insurers set categories for people with similar profiles. If you belong to a group that is statistically more likely to be responsible for an accident or is reckless, this could affect your insurance premium.


6. The protection you choose

The government of your province or territory sets a minimum insurance amount, but other protection options are also available. Choosing a scope of protection is important because it determines the level of protection of your insurance policy. As a rule of thumb, the higher the coverage, the higher the insurance costs for your vehicle.

Tip: If you want to pay a lower car insurance premium, an easy solution is to increase your deductible.

The deductible is the amount you have to pay to pay for repairs before your insurance company pays the rest. For example, if you are involved in an accident that causes $ 5,000 damage to your car and your deductible is $ 1,000, you will first have to pay $ 1,000 for repairs, and then your insurance company will refund the rest of $ 4,000.


8. Factors beyond your control

Some factors that are considered when calculating your premium do not depend on you or your vehicle. For example, if the government introduces new regulations or the inflation rate changes, your premium may vary.
Tags
Reactions

Post a Comment

0 Comments