Are you buying a car and wondering how much insurance will cost you? Or do you already own a car with insurance and wonder why your car insurance premium is so expensive?
The amount you pay for your car insurance policy reflects how likely an insurer thinks you will make a claim. The higher the risk, the higher the premium and the lower the risk, the lower the premium.
Here’s a breakdown of how insurers calculate your car insurance premium:
1. Age
Age is one of the most significant factors insurers consider when calculating your premium. Insurance companies see people under the age of 25 as high risk because they have less driving experience. This age bracket is statistically more likely to be involved in an accident, which means they generally face the highest prices. 45-year-olds are considered more settled and mature. Therefore, their policy rates are typically lower than those for younger motorists.
2. Marital Status
Did you know that you are considered high-risk if you are not married? Married couples could be regarded as less risky as they travel less and are less active on the road than single or divorced motorists.
3. Location
Where you live influences how much you pay for car insurance. Where you park your car, for example, in the street or garage, and the area you live in will affect how much you pay. If you live or work in a dangerous neighbourhood where crimes generally occur, you’re likely to pay more, whereas your premium may be low if you live in a more secure area.
4. What is your car used for
One of the questions your insurer will ask is whether your vehicle is mainly used for personal or business use. This is important because if your job requires you to spend more time on the road, drive more at night, and carry the necessary equipment, it increases your chances of being in an accident or hijacked. This means you will have a higher premium because you are spending more time on the road than another person that drives to work, stays at the office, and goes home at the end of the day.
5. Vehicle type
The more expensive your car, the more expensive it will be to insure the vehicle. Some luxurious cars are at high risk of being stolen, which also boosts the cost of your insurance. If your expensive vehicle is written off in an accident, it could also be more costly to replace or repair.
Car insurance is mandatory when buying a car. It covers financial loss associated with the vehicle for as long as the policy lasts. A car is an expensive investment, so it is essential to protect it. In South Africa, we have a wide range of insurance covers that one can choose from, according to your need and affordability.
Disclaimer
Getting insurance is an intricate matter. Therefore, this blog should only be used for information and not as a financial guide. If you wish to buy car insurance, please get in touch with a certified financial advisor for professional advice.
