When it comes to purchasing insurance, car insurance will burn a huge hole in your wallet; and it seems quite hard to understand why. If you are fretting over how to lower your car insurance costs, we are here to help you better comprehend the high costs of car insurance, and what steps you can take to mitigate the costs.
How Does Car Insurance Work?
As a driver, you pay a regular premium to a car insurance company and get cover for certain costs in the event of car damage, or other specified matters. In a car accident, the at-fault driver’s costs will be covered under car insurance, but this depends on the type of cover, as the extent of coverage varies from one policy to another. The following are some terms that not everyone may be familiar with:
- Compulsory Third Party
This is a legal requirement that covers the cost of personal damage that you inflict on others and includes medical bills.
- Third-Party Property
This covers the cost of damage that you inflict on other people’s property, which is important for a safe driver. However, this doesn’t cover the damage done to your own vehicle.
- Third-Party Fire and Theft
This covers your vehicle in the event of a fire or theft.
- Comprehensive Insurance
This is the most comprehensive insurance that you can obtain, as it covers the damage costs of people’s property in the event that you get into an accident and those of your own car as well.
From the car insurer’s perspective, they are offering you cover over a specified duration depending on the level of premiums that you pay; but at the same time, they’re taking the risk by assuming that they have charged you a sufficient amount of premium fee. As a result, a higher premium is charged to drivers who are likely to make a claim. The risk level of a driver is determined by various risk factors. The following are some of the key factors that a driver is scored on:
- Age: The younger you are, the higher the risk of your premiums. Younger drivers are deemed more likely to get into car accidents than older and more experienced drivers, and this is backed up by statistics.
- Driving Experience: Similar to the above point, drivers with more driving experience will be charged with a lower premium fee since they are at a lower risk of getting into a car accident.
- Driving History: Your driving history will be looked into. Drivers with a history of one or more accidents will be classified as higher-risk drivers, which results in a higher premium fee. Gender: Men, especially for the younger males, generally pay more for car insurance. Statistics revealed that men can pay up to 17% or more as compared to their female counterparts.
- Vehicle Type: Some vehicles are more accident-prone than others, and this affects your premiums. The color of your car can also be a factor taken into consideration.
- Location: Those living in the city areas will naturally face higher premiums than those residing in the suburbs, or the countryside. This is due to higher traffic in the city, which increases the risk of an accident occurring. There is also a higher crime rate in the city, which increases the chance of car theft.
- Claim History: Car insurance companies look at your claim history. As such, your risk profile is likely to be affected, depending on whether you’ve made a claim when past accidents occurred.
- Cover History: Your cover history will be taken into consideration as well. A clean insurance history will probably result in lower premiums.
- Where Your Car is Parked: With regards to fire and theft covers, the safety of your car’s parking location matters.
Factors that influence your premiums are getting increasingly complicated, due to advanced technology improving the amount of Big Data that insurers have access to. For instance, an insurer’s algorithm may reflect a claim percentage that is higher than average, and this data will, in turn, affect your premium. Although this sounds unfair, it’s the only way for car insurers to balance the risk.
How Can I Save On Insurance?
- Sell Your Car
This goes without saying; non-drivers will save on car insurance entirely. Do the calculations, and some of you may realize that it’s not worth it to own a car after all. This is especially if you don’t make use of your car as much as you’d like to make it worth your money.
2. Shop Around for the Best Deals
Look for the best deal by comparing different insurers out there, and what they have to offer. The insurance industry is notorious for pricing the same policies at different price levels, so don’t stick to the first “good” deal you see, but continue searching! It’s definitely time-consuming and a relatively difficult task to make comparisons, but make use of the Internet to help you break down the job in no time.
3. Be A Safe Driver
Insurance companies will scrutinize your driving history, where premiums will be raised or lowered based on your track record. Safe drivers will naturally cause fewer problems on the road, which leads to more money being saved over time. As such, be sure to practice safe and responsible driving no matter what!
4. Drive Less
Driving less can help you to save money. Some insurance companies offer Pay As You Drive (PAYD) cover, an insurance policy tailored to responsible drivers over the age of 25, and who spend less time on the road than the average driver. This is to compensate low-mileage drivers who don’t roam the road frequently. Under this cover, drivers get charged per kilometer drove, which will lead to significant savings for infrequent drivers.
5. Protect Your Car
Keep your car safe by taking the appropriate measures. Your premiums can be reduced when you take actions to lower the risk of your vehicle getting stolen or damaged. For instance, insurers will charge a lower premium for your comprehensive insurance, if your car is kept in a locked garage. Not only does this prevent theft or damage, but it also protects your car from natural environmental damage such as hail.
Although we’ve provided you with the necessary information on how you can save on car insurance, you should certainly not expect to save a large sum; it’s unlikely to be that easy. We know that car owners out there may feel that car insurance is a necessary evil, but it’s still of utmost importance that you’re covered. If you are wondering if there are any affordable insurers out there, you can definitely keep your wallet happy and drive with peace of mind with Youi’s affordable car insurance in Australia.
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