The price of car insurance is one of the claims that can make a driver decide on one policy or another. However, many policyholders are surprised that their insurance begins to rise, without finding the exact reason. Why does the price of your car insurance increase? At Kelso, we try to give you some clues.
In this article you can learn about:
- Driver characteristics
- vehicle features
- How do the coverages influence the price of car insurance?
- How to calculate the price of your car insurance
More and more drivers are trying to save on the price of their car insurance by looking for companies that offer reduced premiums. Although there are low-cost insurers, the truth is that the final price of your policy will depend on several factors that, as a general rule, are beyond your control.
Companies establish different risk profiles depending on the characteristics of the driver and the vehicle to be insured. Thus, the price of your car insurance will vary depending on the profile that you have been granted. In addition, the assignment of these profiles is not the same in each company, so it is not possible to say, a priori, which is the one that offers the cheapest insurance or the best car insurance.
Now, knowing the most common factors they take into account to establish this risk profile will help you get an idea of how much the insurance will cost you. Of course, remember that although some are more common, not all companies value the same aspects to calculate the price of car insurance.
Driver characteristics
Car insurance is a personalized product for each driver, so you might consider changing your insurer if you see that another company offers you a better price. In fact, not all companies offer insurance for all drivers. These are some of the most common factors that companies take into account when calculating the price of car insurance that they will offer you:
- The seniority of the driver’s license: is a determining factor. When you contact the insurer, they will ask you the date you obtained your driving license. In this way, he will be able to know your experience as a driver, since he will understand that the greater the seniority, the greater your experience on the road.
- Driving history: when calculating the price of your car insurance, the insurance company will take into account your driving history. If you’ve had a lot of tickets or accidents, you may have to pay more.
- License points: some companies reward good drivers, so if you have the 15 license points, they may make you a more attractive offer.
- Driver’s age: if you are under 25 years old, the price of car insurance that you will have to pay will be higher. This is because statistics indicate that young people between 18 and 25 years of age are the ones who have the most accidents.
- Place of residence of the driver: insurers are guided by statistics to calculate car insurance prices. For this reason, they take into account the driver’s place of residence, since accident rates and crime levels are not the same for all areas. In this way, if you live in a very congested town or with many thefts, your insurance will be more expensive.
- Driver employment: statistically, certain professions have more accidents, either because they require a greater number of trips, or because they are associated with a higher level of stress.
- Seniority in the insurance: certain insurers offer discounts on the price of car insurance to customers who have been with the company longer and are good drivers.
Frequency of use of the vehicle: when calculating the price of car insurance, some companies also value the use that you are going to give the vehicle. If you are a sporadic driver or only take it on weekends, you will spend less time on the road and the probability of having an accident will be less.
Vehicle features
In addition to the characteristics of the driver, certain factors related to the car are also key to calculating the price of car insurance. At Kelso, we explain why the price of your car insurance increases:
- Year of registration of the vehicle: newly registered cars pay lower premiums than those that have been registered for years. In other words, the price of car insurance will be higher if you buy a used car.
- Power: if you choose a car with more horsepower, you will have to face a higher premium, since most companies consider that with the power of a vehicle, the chances of having an accident increase.
- Risk of vehicle theft: if you want to achieve a more adjusted price for car insurance, you can incorporate a device that reduces the chances of theft of the vehicle, such as an alarm. Some companies discount customers who hire a stolen vehicle location service since these mechanisms allow knowing where the car is in the event of theft thanks to a device previously installed in it.
- Parking place overnight: if your cat sleeps on the street, the risk of theft or damage is higher than if you leave it in the garage and, therefore, you will have to pay a higher price for car insurance.
- Extra accessories: when taking out car insurance you must declare all the additional accessories of the vehicle, such as alloy wheels, xenon headlights, or integrated GPS, for example. Some companies include these accessories in the policy without increasing the price of car insurance. However, others distinguish between the standard ones – those that are incorporated at the dealership – and the additional ones – those added later. Insurers will force you to pay more for the latter, understanding that they pose a greater risk.
- Particularities of the vehicle: brand, model, number of doors and seats, type of vehicle, cylinder capacity… Insurers also pay attention to these issues when calculating the price of car insurance. For example, in the case of engine displacement, the greater, the greater the power, which will increase the premium.
How to calculate the price of your car insurance
As we have already seen, to calculate car insurance you have to take into account many factors that have to do with the vehicle and the driver. Pay attention to all these aspects to calculate the price of your car insurance, but don’t forget the benefits you need.
To the above characteristics is added what your car insurance does and does not cover, to find a policy that meets the necessary coverage. It is possible that, in many cases, you will have to contract some additional benefits, which can cause the car insurance budget to rise.
How do the coverages influence the price of car insurance?
Beyond the compulsory third-party insurance – which is the one that includes civil liability for damages caused to third parties and legal defense – there are many voluntary covers at your disposal, such as occupant insurance, broken windows, theft, or travel assistance. Naturally, the more coverage included in your policy, the higher your car insurance budget will be. For this reason, you must know your needs well in order not to contract either insufficient or excessive coverage. To do this, the first thing you should be clear about is the different types of car insurance:
- All risk: this modality is the most complete. It includes damages caused to third parties and also those of the vehicle itself when the owner of the vehicle is at fault. It can cover from minor damage to the car, such as scratches or blows to the sheet metal, to the most serious event or total loss of the vehicle. The price of comprehensive car insurance is the highest as it is the one that includes the most coverage.
- The full risk with excess: it is very similar to the previous one, but it differs in the payment method since in this case, the owner will have to bear part of the damage caused. The deductible is the amount paid by the insured in the event of a loss for which he is at fault; the rest of the payment will be borne by the insurer.
- Basic third-party: it is the type of policy that has the least coverage, which means that the cheapest third-party car insurance has the lowest premium of all modalities. The drawback is that, as a general rule, they only cover damage to other vehicles.
- Extended third-party coverage: includes the same coverage as third-party insurance but also covers damage to the windows of the vehicle and damage caused by fire, as well as car theft.
