Factors That Determine What You Pay as Car Insurance Premium
Do you feel that you are constantly being charged unfairly huge sums of money on your car insurance? From your conversation with fellow motorists, does it always emerge that you are being charged higher car insurance premium rates than almost everyone else you ever talk to?
To understand why it is that car insurance premium prices vary from person to person, we have to appreciate the basic fact that insurance is supposed to be a ‘hedge’ against the risk of car accident (and perhaps car theft and similar risks). Now in working out what to charge the various people who seek to buy car insurance from them, car insurance providers try to work out what the probability of the different people suffering the different events they are insuring against, especially the road accidents is, with the people who are at a higher risk of suffering from the same being charged for more car insurance than people who are at a lower risk of suffering the events they are taking car insurance against.
In trying to establish the risk of someone suffering a particular event they are taking insurance against, car insurance providers use ‘profiling’ techniques, so that people who meet the ‘high risk profile’ criteria find themselves being charged higher car insurance premiums than the people who meet the ‘low risk profile’ criteria. Several factors are taken into consideration in this ‘profiling.’
If you have a record of traffic-related convictions (even based on as ‘simple’ mistakes as obstruction and slight over-speeding), then chances are that you will find yourself paying higher car insurance premiums than drivers who have a record for being ‘obedient’ road users.
If you drive a car whose model has been associated with a higher frequency of road accidents or more gruesome road accidents, chances are that you will have to pay higher car insurance premiums than a person driving a ‘safer’ car – all the other factors held constant. If you drive a ‘high’ risk car, though, but take measures to make it safer – by way of installing air bags, anti-lock brakes and so on, you could find insurers more willing to offer you car insurance at better rates.
A driver’s age, too, is another factor that car insurance providers take into consideration in working out car insurance premiums. With regard to age, younger drivers (and young here typically means bellow 50 years of age) are typically charged more in terms of car insurance premium than older drivers, since it has been observed that younger people tend to be more accident prone than older folks.
