Car insurance works out a different cost for different people. This will be because of many factors that insurance companies take into account when determining the risk a driver and their vehicle pose. This article will look to demystify this whole process. Also, there are car insurance guides that you can refer to when it comes to knowing what to look out for to keep your insurance premium budget-friendly.
Car Groups
The insurance group that your vehicle fits into will be nothing to do with your ability as a driver or claims history, yet will significantly impact how much insurance you will pay.
Cars are grouped from 1 to 50. If your car falls into Insurance Group 1, then that will be your cheapest option. However, we choose our car for many reasons, including performance, luxury branding, how it looks, reliability and safety, and this will mean that it is highly unlikely that most of us will come even close to Group 1 with our vehicle. Not with so many group classifications.
So, what factors affect an insurance grouping? Well, it is based on engine size and the performance capabilities of a vehicle as well as how expensive it would be to repair or replace in the event of an accident or loss. If parts are difficult to obtain or that particular model is difficult to work on for a garage that would mean extra expense for an insurer. This extra cost will be passed on to those insuring that particular model of vehicle. You will note it is not just about a make, such as your car relating to a known luxury brand, but also about the features and desirability of a certain model. This is where the variations in terms of risk can exist.
A vehicle that is a known theft risk, or one that historically has the potential to speed and so cause more damage in the event of an accident, will find itself in a higher insurance group.
Where You Live
Certain areas will have higher crime rates. This will matter even more when you have a high-performance or luxury vehicle that will prove attractive to thieves. Also, vehicles with poor security will become a greater theft risk. Any additional risk will be passed on to the insured by way of a higher premium to pay.
Occupation
Higher-risk occupations will include roofers, armed services personnel, firefighters, offshore workers, pilots, out-of-hours workers, such as waiters, and celebrities. We will not choose our job based on insurance prices but it is important to accurately describe our job to the insurance company so that we are not paying more premium than we need to be.
Age of Drivers
Drivers under the age of 25 will pay more for insurance. As a parent, you have the choice of when to guide your son or daughter into having a policy of their own. It can work out cheaper to put them as a named driver on your insurance, to begin with. You will, though, at some point, want them to build up no claims bonus in their own right, which will then prove a useful discount in the future in terms of the premium they will then pay.
Discounts
Insurers will offer discounts to make car insurance more affordable to the masses.
No claims bonus is one way that insurance premiums are reduced. An insured will find that they get more discount off their premium the more claim-free years that they have. There is a ceiling on this, however. This is usually 5 or more years, which attracts a capped discount of 60 or 65%.
Voluntary excesses or higher deductibles can be opted for, which will mean that you pay more of a claim yourself. If you do not have many accidents, this can prove to be cost-effective. Young drivers will attract higher excesses anyway, which may factor in your decision as to whether to increase an excess further.
Discounts for approved immobilizers or alarms will also help reduce a premium, as can the fitting of a camera that will record accidents and prove for definite whose fault it was. This also tends to make for safer drivers as the insured will know that their driving is essentially being observed should they need the evidence that an accident was not their fault.
Claims History
Having claims will increase your premium, and not just because of the no claims discount that you might lose if you have not insured with a protected no claims bonus option included.
The hope here is that all of the above will have guided you into how you can save money with insurance. This can be done by making yourself, and your vehicle, less of a risk to the insurance company, and taking advantage of all the policy discounts. This will have a significant impact on how much premium you will pay annually, or when changing your vehicle.
