As a new car owner, you are probably wondering how insurance companies calculate their policy. You definitely would like to know what factors will determine the amount you pay. Different factors determine this amount and it’s good that you understand every aspect. The condition and the age of your car are some of these factors.
· The Usage of the Car
There are four main ways that you could be using your car in. The car could be for pleasure; it could be for just going to work or for business. This determines the number of miles you could be driving on a daily basis and the more the miles, the more money the insurance will cost. Pleasure and business usage will cost more.
· Your Insurance Credit Score
The higher your insurance credit score is, the better the car insurance rate will be. If it is low, the insurance company will predict that there are high chances that you will be filing for claims soon. This is a cost to the company and they do their best to prevent it, but when your insurance rate is high, even when there is a claim, it will be deducted from that amount.
· The Type of the Car
We could basically say the value of the car. If the car has high-quality safety equipment, it reduces the chances of theft. This minimizes the chances of the insurance company paying for claims. The size of the engine, the cost of the car and repairs will also determine the rate that you pay. For example, insuring a Range Rover Sport would not cost the same as insuring a Toyota Camry despite the year of manufacture is the same.
· The Location of the Car
If the area the car is mostly located has high chances of theft, vandalism or incidence of claims, your insurance rate will be high. The insurance company will want to know where the car is usually parked. Basically, the higher the chances of theft or damage to the car, the higher your premium rates will be.
Different insurance companies will base their rates on different factors. The most basic ones are the type of the car, where it is usually located, its value, your insurance credit score, the chances of damage or theft and its uses. The condition and age also matter. It’s advisable that you ensure the car is well-maintained and protected to ensure the insurance rates are not too high.