Have you ever wondered how your car insurance company calculates how much you'll pay as a premium? You might have a rough idea of what might cause the amount to vary, but you could also be hazy on what actually makes a difference. Your auto insurance provider typically does a lot of background work on you and your vehicle.
The idea is to assess the likelihood of you making a claim. It usually boils down to your personality, driving style, and information on your vehicle. The insurance premium is higher if there is a greater chance of you making a claim. Have a look at these key factors that aim to shed more light on how these premiums are set.
Vehicle Age and Model
Your car insurance premium heavily depends on the value and year of manufacture of the vehicle being insured. As a rule of thumb, newer vehicles tend to be more expensive.
Essentially, as your car grows older, its value depreciates. This means that a 20-year-old car will usually cost less in terms of insurance premiums. Another thing to consider is the model of the car you're insuring. A sedan or minivan will cost less than a luxury sports car.
So, if you're an avid sports car enthusiast, you will pay more for insurance. Auto insurance firms also set higher premiums for such vehicles since their owners often drive at high speeds. Higher speeds mean a higher risk of accident and a greater possibility of the owner making a claim.
Your Driving Experience
A driver with little experience on the road is automatically considered high risk by car insurance providers. It doesn't matter whether you're a teenager or an adult in your 50s. In such a case, you may have to pay a higher premium for your car's insurance.
Conversely, the longer you've been a driver, the less your insurance will cost you. It's also an added advantage if you're an experienced driver without any accident records. Your insurance provider will be sure to factor in such things when calculating how much you'll pay for coverage.
How and Where You Park Your Vehicle
Your car insurance provider will want to know if you have your car parked in a garage or on the street near your home. Typically, garages are considered to be safer than parking outside. This is because cars parked on the streets are much more likely to suffer from theft or accidental damage. Moreover, your auto insurance rating gets better if your car has an alarm system installed.
Contact a company that offers auto insurance to learn more.