Before you think about the factors that affect the car insurance premium and how you can use them to reduce it, everyone needs to understand what a car insurance policy is and how it exactly works. The best car insurance is a rock-solid contract between the policyholder and the car insurance company. These contracts involve several kinds of terms and conditions, which the policyholder needs to go through
Understand that many things impact the vehicle insurance premium,like the type and age of car, discounts, policyholders’ background, weather events in their area of residence, and more.
Several factors affect car insurance, and a few of the most important ones are mentioned below.
- The foremost thing that decides the car insurance price is the type of car insurance policy you buy. Aside from compulsory third party insurance, which is mandatory, there are three types of additional car insurance you can take up:
- Comprehensive car insurance – the most extensive coverage (and therefore the most expensive), protecting you against damage to your and others’ vehicles and property plus weather events, fire and theft
- Third party fire and theft car insurance – protects you against damage you do to others’ vehicles and property plus fire and theft
- Third party property car insurance – protects you against damage you do to others’ vehicles and property. This is the moist basic coverage so will be the cheapest
- Considering the make, model and year of the car is critical because every car can have different variants and versions. These factors and the overall safety rating of that car all play a crucial role in determining the insurance policy price.
- The policyholder has a significant impact on the premium of the car insurance. Suppose the policy holder’s previous driving history has red flags like breaking traffic rules, speeding fines and being involved in accidents. In that case, the insurance company can determine the policyholder as hazardous and will charge a higher premium. They can also reject your application as policyholders.
These are three factors that significantly affect the best car insurance premium. Even if you consider yourself a responsible driver, it is recommended to opt for a comprehensive car insurance policy because roads and other drivers are unpredictable. Even if you always follow all the road rules and regulations, you cannot be 100% sure that nothing will go wrong. Because in case of an accident, the party who suffers the most may not even be at fault. Your investment in your car and your bank balance are precious, and you should do your best to protect them. If you are one of the responsible drivers, that will provide you with some brownie points to reduce premium prices.
