Have you ever wondered how a car insurance company calculates your insurance premium? In this article, we will share all the components that make up the final quote of your car insurance.
You may not know this but there are a number of factors that influence the rate of your car insurance in Bahrain, or for that matter, in any other part of the world. While some of these factors may not be in your control, there are others that definitely are. Knowing these factors in detail will not only reveal how your premium is calculated, but also what you can do to keep it low.
Here are some of the primary factors that make up your car insurance premium.
Driver’s age and driving experience
One of the factors that influence your car insurance premium is your age. If you are someone below the age of 25 years with a driver’s license that is less than one-year-old, then your premium could be at least 15-20% higher than average. This calculation is based on a statistical correlation stating that the frequency of accidents and mishaps are higher amongst people who have lack of driving experience and fall within this age group.
History of accidents and fines
Drivers who have been in accidents or have received a number of fines in violation of traffic rules will find themselves paying a higher premium. Insurance companies consider all your previous claims while calculating your final quote. Your insurance company will charge you a higher premium if you have made claims in the past. At the same time, claiming no insurance makes you eligible for a no-claims bonus that is deducted off your premium.
Age and coverage of the vehicle
Another important factor that determines your insurance premium is the age of your vehicle. Needless to say, since a new car is more expensive to replace or repair, you would need a more comprehensive coverage to protect it against damage. An increased coverage means that you will have to shell out more to pay for the higher premium on a new car. However, older cars can be secured with a more affordable third-party cover.
Car type and features
A luxury car or pricier cars cost more in terms of repair or replacement, especially if they have expensive spare parts. However, insurers reduce premium if the car comes with sophisticated safety features. Since such a car is safer to drive, they charge a lower premium in the final quote. At the same time, vehicles with large engines attract higher premiums.
Repairs done by agencies or non-agencies
Repairs are an important point that is factored into your insurance premium calculation. Your car can either be repaired by your car’s official dealer (also known as agency repair) or by a non-agency that is approved by your insurance provider. The option of agency repairs can be included in your insurance cost by paying an additional cost. However, be sure to check if it is already included in your policy.
Amount payable by the insurer
Also known as deductible or excess, this is the amount that you agree to pay yourself in case of an accident caused by you. You can reduce the monthly premium by agreeing to pay a higher excess amount or vice versa.
You can pay a fixed extra amount for any other additional or optional benefits, such as broader geographical cover, roadside assistance etc., that you would like to add to your existing policy.
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