subject: What Determines My Car Insurance Premium? [print this page] Your Vehicle Insurance Premium depends on not one but many factors:
Government Policies and Place of Insurance
Compulsory and Voluntary Excess
Insured Declared Value (IDV)
Luxury Standards and Performance Capacity of Vehicle
Cubic Capacity
Type of Insurance Cover
Car insurance is a necessity that you wouldnt be able to neglect, as long as you claim ownership of a vehicle for your transportation needs. You would have to shell out regular car insurance premium for your insurance to be valid and to be of use just when you needed it. But have you ever wondered what determines your car insurance premium?
There is a host of factors that go into determining the vehicle insurance premium, based on chances of future insurance claims of the vehicle. If you are looking for cheap car insurance, you need to realise that the best vehicle insurance in town would calculate your insurance premium based on numerous factors.
Government Policies and Place: Since insurance is still a regulated industry, vehicle insurance premium depends on what the policies of the state and central governments are, depending on the place where your car is registered. The best vehicle insurance would be able to strike a balance between government regulations and market needs.
Compulsory and Voluntary Excess: Every time there is a claim on account of an accident, there would be a deductible or an excess that would have to be paid by the vehicle owner, an amount that is deducted from the policy settlement by the insurance company. You could reduce the vehicle insurance premium by choosing to have a higher excess than just the compulsory excess, called the voluntary excess, and avail the services of cheap car insurance.
Insured Declared Value (IDV): An IDV is the maximum amount that an insurance company would have to settle in the event of a complete write off after an accident as part of vehicle insurance. The IDV could be equivalent to the market price of a new vehicle as it is driven out of the showroom, but the IDV comes down with every passing year as the vehicle grows older and the depreciation, higher. Vehicle insurance premium depends on the IDV at any point in time during the insured life of the vehicle.
Luxury Standard and Performance Capacity: Even the best vehicle insurance would be expensive if the vehicle that you own is classified as a luxury, considering the high cost of replacement parts required. Further, vehicle insurance would also take into account the performance capacity of vehicles, as those with high levels of performance may be prone to risky driving, which would reflect on the vehicle insurance premium.
Cubic Capacity (CC): The engine size is a determinant of vehicle insurance premium and even cheap car insurance would cost more if your engine has high CC, when it comes to third party insurance.
Type of Cover: The best vehicle insurance for you would depend on the type of cover that you choose, depending on whether it is a comprehensive coverage or just third party insurance that you would be interested in.
by: SjoerdN
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