If you’re shopping around and getting car insurance quotes from different companies, you might be wondering how exactly those car insurance companies determine how much your quote will be. The cost of your quote will depend on the company, but there are certain factors that all companies use to decide how much you’ll pay. Part of your quote will be decided by what kind of policy you’re looking for, but mostly your quote will be based on risk. Basically, the riskier you are, the more a company will charge you, since there’s more chance that the company will need to pay out on your policy. Take a look below to find out how your car insurance quote is determined and your monthly premiums of course.
Your Policy Decisions
Firstly, the value of the coverage you want will effect your monthly premiums. If you want more coverage, you pay higher premiums, so, if you want to cover your car for say R100K and not R80K, then obvious the risk is higher for the company because they would have to pay you more should something happen – hence, a higher premium. That’s simple, but then there’s the question of excess. Excess is the ‘participation fee’ that you pay in the event of an accident, and your insurance company pays for the rest of the damage (you can find out more about this by reading our car insurance terms and definitions page). The more you are willing to pay when you claim, the lower your premiums will be. The cheapest car insurance policies tend to have very high excess payments, so be sure to compare this point.
Your Driving History
Something else that has a big effect is your driving history. Had a lot of accidents in the past? Then you’re going to be paying higher premiums, because the car insurance company assumes that you’re going to have more accidents. Similarly, your mileage will also effect your premium. Higher mileage equals more driving, which means there’s more chance of an accident and therefore you’ll pay more.
Your Personal Status
As unfair as it might sound, most companies take into account age, sex and even marital status when giving out car insurance quotes. A young, single male will pay more than an older, married woman, for example. Unfortunately, there’s not much you can do to change these factors…
Your Car
Some cars just cost more to insure than others. Obviously, a more expensive car will require more coverage (you’ll want to get back the cost of the car if it’s destroyed). But different sorts of cars also get different premiums. A sports car is considered higher risk, it can travel at higher speeds and is more likely to get in an accident, which means higher premiums. Cars like SUVs and luxury vehicles are more likely to be stolen, so again, get higher premiums. If you want cheap car insurance, then you might want to choose the car you drive very carefully.
The Safeness of the area you live in
Certain areas are more dangerous than others in terms of accidents and car thefts. That means that your location as well as the areas you generally drive in can be taken into account when calculating your premiums. Most car insurance companies will give you lower premiums if you can prove that you are taking good security measures (such as keeping your vehicle in a locked garage).
Your Credit
Some insurance companies will also take your credit score into account. A bad credit score is seen as an indicator of a high risk policy buyer, which is why your credit records might be requested.
Miscellaneous Things
Finally, there are other factors that insurance companies may take into account. These include things like the age of your car, whether you’ve taken special driver’s training courses or not, or if you’ve had insurance lapses (periods of time where you’ve not been insured). These vary a lot by company.
The Bottom Line
There are many things that effect the cost of your car insurance quote, some of which you can control and some that you can’t. A word of warning however: it’s never worth lying on your policy application, even if you know that something is going to send your premiums sky high. If you get caught then at best your policy becomes invalid, and at worst, you could be accused of fraud. Try to limit your risk factors as much as possible, and shop for car insurance quotes online to get the cheapest deals. If you’re looking at getting a new policy, then you can get a couple of Free car insurance quotes by filling in the form on the top left or here above to help get you started.
Main Subject: car insurance quotes
