What Determines the Cost of Car Insurance?

Hands up if you’ve ever been on the receiving end of an insurance quote call that takes at least ten minutes, giving away information that some regard as unnecessary.

There is good reason insurance companies ask the questions they do. These questions help them determine how much of a “liability” you will be to that insurer.

We’ll be covering the 6 most important aspects of what determines your monthly premiums on your car insurance.

How Many Years have you Had Your License?

This question may be coupled with “have you gone on any advanced driving courses?” This helps the prospective insurer determine how experienced you are as a driver, and how quickly you’ll be able to avoid being involved in an accident. Drivers with less time having had their license will be considered a higher risk to the insurer, and this will likely increase your premiums.

 

How Many Years Have You Been Claim-Free?

This helps insurers assess if you are a reckless driver, are involved in many accidents or if you are someone who has managed to avoid any incidents. The fewer incidents to your name, the lower your premium will likely be.

 

Do You Use Your Cell Phone When Driving?

This may come as a surprise to you, but this is a question popping up in quotation assessments more often. While many will lie and say “no”, some insurers have implemented a “good driving” system that connects when you are driving. This allows them insight to see your cell phone usage (cell phone navigation not included) while driving. Lying could cause forfeiture of the insurer to pay any future claims, so be careful to not use your phone at all when driving, and be honest when answering this question in the process.

 

Where Do You Park Overnight and During the Day?

Parking in non-safe, un-gated or non-monitored areas will drive up your monthly premiums. This is associated to the risk you pose for your car being stolen, either during the day or overnight. It’s vital you’re 100% transparent when stating your answers, but do remember this factor is linked to your risk profile.

How Many Years Have You Been With Your Current or Previous Insurer?

Loyalty is an underestimated factor when it comes to insuring your car. If you’ve hopped between 5 insurers in a year, a red flag is immediately raised as to why? Were you reckless and had your insurance limited or revoked? That will increase your monthly payments. However, if you’ve been with your insurer for years on end (even better, claim free in those years) – your premiums will drop quickly.

 

What Will Your Excess Be In the Event of a Claim?

Your premium and excess work on a sliding scale; your premiums can be lowered if you choose to have a higher excess, and similarly, your premiums will be higher if you opt for a lower excess amount. Choose wisely though – think of what will be easier for you in the long run – higher monthly payments or a higher lump sum payable in the event of a claim.

All information provided in this article is not a reflection of the opinions of the supplier. All information is true at the time of publication and may be amended at the suppliers demand. Liability for incorrect information is excluded.