Your Car Can Determine Your Insurance Premium

Are you one of the many people who feel that what you are paying for car insurance is probably too high; but you just have to pay, since car insurance is a statutory requirement in most legal jurisdictions before you can put a car on road? Have you always wondered why it is that you are charged so much on car insurance, whereas nearly everyone that you talk to seems to be charged what turn out to be considerably lower car insurance premiums? We attempt to answer that question for you here.

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.

And in working out your ‘risk profile’ car insurance providers in turn look at a number of factors.

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.

The type and model of car you drive is another factor taken into consideration by car insurance providers in working out their premiums. Some car models and types have been proven to be more exposed to accidents than others; and if you happen to own one of these unfortunate cars, it should not come to you as a surprise when you are charged higher amounts in car insurance than a person whose car has a lower risk profile – though you can make your car safer through measures like the installation of airbags and anti-lock brakes, and thereby lower the car insurance premiums you are liable for.

Younger people, perhaps due to hormonal action or ’sheer lack of wisdom’ have been noted to be – on average – much more ‘reckless’ drivers, with older drivers being considered ‘lower risk’ profile drivers. It should therefore not come as a surprise when all things held constant, your friends who are above 50 years of age end up being charged lower car insurance premiums than you, if you happen to be below 50.

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