Calculating Insurance Premiums, what do I need to know?

Did you know insurance branches house an entire department with the strict and only purpose of analyzing and calculating insurance premiums? It’s quite amazing, but when you think deeper about it, it really makes sense. Developing and building an affordable premium for the client is a serious issue.

Car insurance is one of the more vital and recognizable insurances you will ever be covered under. Why is it so important? Car insurance more than any other type of insurance, rewards people that play it safe and our smart. The older you get, the more discount on your premium you are awarded.

Driving history directly relates to driving experience. The more experienced you are, the longer your history. You can build an outstanding driving past, by staying out of accidents and avoiding speeding tickets. If your driving record limits or omits those two “no-no’s” then you’re in great shape.

When you first earn you driver’s license the insurance agency hands out so many points. Generally this number is small because you are very inexperienced and unproven as a driver. As time progresses you earn more points. Points are taken away for speeding or driving offenses.

As you are well aware of, driving under the influence of alcohol and/or drugs are not only detrimental to your own well being, but also a danger to the road. Insurance providers do not take kindly to drivers arrested for drunk driving. You’re license is usually removed for quite some time, and you pay for it for years down the line with a high premium.

If you respect he road and drive defensively, your premium will reflect that. When it comes time to renew a comprehensive car insurance policy, the driver can have some sway over their premium. For example, the driver can take advantage of their “no claims” bonus, reducing the premium by a percentage. The percentage increase every year the driver avoids a major offense or accident.

Getting into a car accident is a frightening moment. However, once is occurs and you find out everyone is safe, the question then becomes how am I going to pay for the damages? Some people will elect to have the insurance company cover the damages. Others will ignore insurance, because an accident claim will wipe out their “no claims” bonus.

Wouldn’t you like to save money? Of course you would, who could turn that offer down? So stop driving with reckless abandon, shape up, and earn a cheaper premium as the years progress.

Graham McKenzie is the content Syndication Manager at Insurance123.co.za South Africans leading car insurance information portal