Contrary to popular belief, car insurance premiums are carefully calculated by insurers, who assign a monetary value to two main risks: the probability of you getting into or causing an accident, and two, the likelihood of your vehicle being stolen. The higher the risk, the higher the premium. But before car insurance providers can work out just how much you need to pay, they take several factors into account.
The basics: your demographic details
In addition to your age, gender and location, your marital status and financial background influence how much you’ll have to pay for car insurance. Why? Because they help to paint a picture of what kind of a risk you pose as a driver. For example, a young, inexperienced driver who lives in an urban environment that has high incidences of hijackings is more of a risk (and will therefore pay a higher premium) than a retired, married woman who lives in the countryside.
Your track record as a driver
It’s a fact of life: some people are more adept behind the wheel than others. And if you’ve had more than your share of accidents, or have been unlucky enough to have had your car stolen, insurance providers will deem you more of a risk. The result? Your car insurance premium will be more than someone who’s never had an accident or been the victim of motor vehicle theft.
To calculate the risk of having your car stolen or broken into, insurers evaluate where your car is stored (especially at night) and what measures are in place to secure it. Unsurprisingly, car owners who have robust security measures in place enjoy lower premiums. It makes sense: if your car is regularly parked outside your house in an area with high incidences of car-related crime, the higher the chances of your car being broken into. In comparison, if your car is parked in a locked garage and is outfitted with a vehicle tracker and remote jamming detector, the lower the risk.
The make and age of your car
It’s a no brainer that the type of car you drive directly impacts the amount of money you need to pay for car insurance. A brand new Masserati is not only worth more than a decades-old Polo, it’s far more costly to repair. But it’s not only the model and age of your car that insurers take into account, bigger vehicles like bakkies or SUVs come with higher premiums as they can do more damage to property and people compared to a Fiat Panda, for example.
As the costs of labour and materials increases over time, so does the cost of repairing a car – regardless of its age. Depending on your insurer, this may or may not be factored into the calculation of your monthly car insurance premium.
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