How car insurance is calculated using car insurance calculator

vet5Most people wonder how car insurance calculators work in calculating the premiums for different car insurance. The money that is charged to cover each car is based on certain statistical assessment of the risk the car and driver poses, the greater the risk of the car being stolen or being involved in an accident, the more the premiums.

Also, someone with a powerful and expensive car will pay more compared to someone with a less powerful and cheaper car. However these are only the rule of thumb and there are other factors that car insurance calculator puts into consideration when calculating motor insurance premiums. They include:

Age of the driver

Age is a very significant factor insurers use in determining how much one will pay as premiums for car insurance. Usually, young drivers between the ages of 17-25 are considered to be less experienced and careless than the older drivers and they are more likely to cause accidents meaning their premiums will higher.

Occupation and area of residence

Certain occupations requires you to spend most of the time driving and carrying valuable items with you. If this is the case, the cost of premiums will be higher.

One’s place of residence also affects the cost of car insurance cover. If you live in a place with high levels of vehicle theft, you will certainly pay more. The same applies if your area of residence has greater risks of accidents.

The kind of car you drive

As stated earlier, the value, power, modifications and desirability of a car determines how much premium you will pay. The premiums of a more powerful and valuable car are higher than those of a cheaper and less powerful car.

Claim history

Insurers need your claim history for the past 3-5 years. The more claims one has made, the more money he or she will be required to pay as premiums as they pose greater risk to the insurer for future claims.

The type of cover you want to buy

There are three main levels of car insurance cover:

  • Third party cover
  • Third party, theft and fire cover
  • Comprehensive cover

Third party cover is the most basic while a comprehensive adds extra levels of cover. The higher the level of cover the higher the cost of premiums.

How the car is used

If you use your car all the time, you premiums will be higher than someone who rarely uses the car. This is because the more you drive, the more likely you are to be involved in car theft or an accident.

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