As a car owner, one expense that you definitely have to bear is car insurance. Apart from the fact that having insurance is mandated by law, you also protect yourself from financial farm by having it. Since this is a payment that you cannot avoid, it is in your best interest to try and reduce your payments as much as possible. There are many ways of doing this but you need to start by understanding exactly how your car insurance premium is calculated. This is generally dependent upon so many factors that it is unlikely that two people will have the exact same insurance even though they drive the same model vehicle.
The following questions are generally used to work out your insurance premium:
- What make and model is your car? Certain cars are known to be more accident prone to others and others suffer very little damage even if they are involved in collisions. There are also vehicles that are very expensive to repair. The cost of insurance therefore varies according to the make of the vehicle.
- Your driving history: Insurers offer cheaper premiums to people who have excellent track records of no accidents. Keep in mind that speeding tickets are also considered here because they indicate that you drive in a reckless manner. In addition, if you can show that you have taken classes in defensive driving then it will help reduce your premium, albeit by a small amount. Insurers also give discounts to people who haven't made a claim on their policy the previous year.
- How often do you drive your car? Your insurer will check the mileage on the car in order to find out how much you have been driving. It is only common sense to assume that the chances of having an accident go up if you drive around a great deal.
- Do you take measures to protect your car? An anti-theft alarm system can help bring down your insurance premium because it indicates that your car might not get stolen after all.
As you can see, there is no one way of calculating car insurance premium. You can use these details when negotiating with an insurer for a lower rate. Keep in mind, however, that each of these factors has different importance. Hardly anyone pays the rate that has been quoted by insurance companies since it has become very common practice to shop around for better rates and to negotiate for a discount.