How Car Insurance is Calculated

The all-new BMW 4 Series Coupé
The all-new BMW 4 Series Coupé

Have you asked the question, why would my car insurance premium be so expensive? I think most of us have experienced the excessive quote for car insurance and we wonder to ourselves how did the insurer get to that number! There are a few factors that impact your car insurance premium and this is why some people pay more than others when it comes to their premiums.

There are a number of risk factors considered by your insurer which create your premium so the riskier your insurer see’s you the more you will pay for car insurance. You can use this online car insurance calculator to see how your premium compares with other insurance companies, see quotes immediately:

Your car insurance premium will also fluctuate depending on what type of cover you are looking for. From most expensive to cheapest and least amount of cover there is Third-party, Third-party Fire and Theft cover and Comprehensive car insurance.

Let’s look at how your insurer will calculate your premium:

  1. Your personal profile

In your personal life there are 3 things that affect the price of your car insurance the most: your age, your gender and your marital status. Insurance companies see everyone under 25 years of age as the riskiest age bracket especially men drivers. As soon as one turns 26 or gets married your insurance premium will decrease as the insurer see’s you as less risky.

  1. Location, location, location:

One of the most important factors that affect your premium is the area that you live in, where your car is parked (e.g., in the street or garage parking) and the area that you work in. Location matters because there are more dangerous areas in South Africa than others which will increase your chances or being hijacked or being in an accident. 

  1. What your car is used for:

Your insurer will always ask you if your car is mainly used for personal use or business use or what your profession is. This is important because the more time you spend in your car driving the higher your risk of being in an accident or hijacked is. So if you have a job that requires you to drive around during the day let’s say dropping off products or going for many meetings then you will have a higher premium because you are spending more time on the road than another person that just drives to work, stays at the office and drives home at the end of the day.

  1. Your car is criticized:

There are a few car factors that have the most effect on your cars premium, you should consider these before buying a car because it can make all the difference in the price of your car insurance premium. To see these factors read the full article here.



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