- October 18, 2017
- Posted by: Jason Duliban
- Category: Automobile
Insurance companies have a complicated way of calculating the cost of insurance. This can be baffling for a driver to understand. If you have been wondering why your insurance premium has increased, there are a few possibilities. Let’s explore the reasons behind an increase in insurance premium:
The financial situation of a country can influence your insurance premium. If the inflation rate has gone up, it is likely that your insurance premium would increase as well. This is because insurance companies have many expenses and inflation would increase their business expenditure, and premiums are their only source of income.
It’s important to know that insurance brokers are not the ones deciding your premiums. All premiums are determined by the company providing the insurance.
Another reason why your insurance premium might go up is due to your driving record. Insurance policies are strict and certain motorists can only obtain insurance for a maximum of three months. There are also insurance plans on a monthly basis. The insurance company will take into account all the factors before insuring your vehicle. They would assess age of the driver, number of years of driving experience, past record of accidents and traffic violations, etc.
Age of the Driver
It has been statistically proven that younger drivers are more likely to drive recklessly compared to drivers above 40 years of age. With a legal driving age of 16 years, high school, college and university students can obtain driving licenses. For insurance companies, these individuals are high-risk, which is why the premiums are typically higher.
Number of years of Experience
A new driver is inexperienced on the road and might not be able to avoid a situation, which could result in an accident and loss. Even if this type of situation does not arise, an inexperienced driver can face difficulties in navigating through speeding traffic, which is a concern for insurance companies as inexperienced drivers are more likely to get involved in an accident. Therefore, insurance companies charge higher premiums for inexperienced drivers.
Insurance companies evaluate individuals based on the number of accidents and traffic violations before renewing their policy. This would account for the risk factor and is managed by charging higher premiums. This includes accidents due to reckless driving, driving under the influence or accidents involving pedestrians. Similarly, traffic violations can affect your insurance premiums. If you have many traffic fines due to speeding, improper parking, or running red lights, you are considered to be causing a hazard to yourself and others. This is an element of risk for insurance companies. In such scenarios, they will charge higher premiums.
As you can see, there are many factors taken into consideration when determining insurance premiums. These factors are similar between some companies and different for others. This is why we work with multiple insurance companies.
At the time of obtaining car insurance, you need to explore your options, always thoroughly review the insurance company and conduct market research before choosing your insurance provider. Several insurance companies offer quick and reliable quotations for car insurance. You can obtain a free quote on your auto insurance through our company. We will shop around 20+ insurance providers to by you the best coverage that suits your needs!