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How is car insurance calculated?



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There are a number of factors insurance providers consider when determining how high a premium to place on motor insurance.

Number of claims made

They look at the number of claims made in the past three years. Looking at your claims’ history gives them an idea of how safe your driving behaviour is and how much you are likely to cost an insurer.

Driving experience

Generally, insurers feel that the more years of driving experience you have the less likely you are to get into an accident. This translates into lower premiums for more experienced drivers, provided they also have a record of safe driving.

No claims discount

Your no claims discount (NCD) lets insurers determine if you are a safe driver. Your premiums tend to be in the approximate range of your NCD.

Given how much your NCD can impact your premium, you would be well advised to get car insurance with an NCD protector feature. This feature ensures that even if you get into an accident and are considered at-fault, your NCD will be protected from dropping by 30%.

Age

In its study of average car premiums across age groups, consumer researchers ValueChampion found that drivers in their 20s tend to pay more for auto insurance compared to those in their 40s.

Gender

Car insurers generally charge men higher premiums than they do to women. This is because many insurers’ claims data show that men are more likely to speed and to get into an accident than women.

Aside from gender, your marital status could also affect your premiums. Insurers tend to believe that married couples are more responsible and less likely to drive recklessly.

Your car

The type of car you drive can also influence the cost of your insurance premium.

*Cars with more expensive parts will incur high premiums.

*The higher your engine capacity the higher your premium.

*The age of your car. While this varies according to the insurer, ValueChampion found that new cars tend to incur higher premiums, with premiums going up incrementally after the 10th year.

Occupation

Your job may also have an impact on the cost of your premium. Certain occupations such as sales jobs require more time to be spent on the road. This is sometimes taken into consideration by insurers.

Annual mileage and usage

If you regularly use your car for work, you will tend to pay more for car insurance than if you use it only for leisure or to commute, as the more you drive the more likely you are to be involved in an accident. Off-peak drivers, too, get a discount as they are not on the roads during rush hour where more cars are present for accidents to happen.

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