What Do You Pay As Your Premium Rate

October 22, 2017 · Posted in General Articles on Car Insurance 

Car insurance premium pricing can be a confusing subject for many of us. It seems unfair, for instance, when you go shopping for car insurance with a friend, only for what they are charged as car insurance to turn out to be as low as a half of what you are charged for the same product, and from the same provider. The truth of the matter though – and this is something you should expect almost universally – is that car insurance premiums charged vary considerably from person to person, even within the same car insurance company.

If you answer ‘yes’ to any of those questions, then you are not alone. As it turns out, the question as to what constitutes ‘fair car insurance premiums’ is a highly contentious one, with many other people (perhaps even those whom you consider lucky in terms of what they pay for car insurance) still feeling that they are paying too much for the product. The formulas that car insurance providers use in working out prices for their products depend on a number of factors, chief among which is the ‘risk profile’ of the policyholders, since insurance is all about risk and risk management. Higher risk profile individuals are therefore charged more for insurance than lower risk profile individuals, all the other factors held constant.

In working out your risk profile – the primary factor that goes into determining the rate at which they offer you their products at – car insurance providers look at a number of factors.

Your road-usage record, and conduct with regard to the ‘highway code’ is one of the factors that car insurance providers look at in working out what to charge you. If you have a record of being ticketed almost every month for one or another road-usage offence, it should not come as a surprise when you find your car insurance bill getting higher every passing year, while people with better ‘road usage’ records get charged lower car insurance premiums.

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.

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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