5 Common Factors Affecting Vehicle Insurance Premiums

Car insurance premiums vary from vehicle to vehicle and driver to driver. Many a time, car owners purchase insurance policies without fully understanding how the insurance provider arrived at the final premiums. Sometimes car owners may even consult other vehicle owners who may own a different policy from an altogether different insurer and get all the more confused.

Some factors affecting the vehicle insurance premiums remain the same across insurance providers. Even with the best car insurance, the below-mentioned factors are most likely to be considered along with several other factors by insurers before coming up with a final value.

Also, the type of the policy plays a significant role in deciding the car insurance premiums. For instance, a comprehensive car insurance policy may demand a higher premium when compared to Third Party Property Damage or Third-Party Fire and Theft policies due to the broader spectrum of coverage it offers.

Here we have listed some common factors affecting your car insurance premiums.

Driver’s Age

The driver’s age indicates the potential risks and degree of risks involved when they are driving a car. Young drivers are considered most at risk, especially younger males. Seniors can sometimes be categorized as riskier than middle-aged drivers, sometimes not, but will be seen as safer than drivers aged under 25 years.

Vehicle type

Your vehicle selection can significantly determine your future vehicle insurance premium. For example, modified or high-performance cars attract higher premiums. So too do cars that are much more likely to be stolen. The psychology behind this is: “An expensive vehicle is expensive to replace, and hence expensive to insure.”

Car parking zone

The vehicle insurance premiums depend on the region you live in too. If an area is classified as a higher risk zone, you will more likely need to pay more on your premiums as your vehicle is more susceptible to theft and/or damage.

Also, cars parked in the garage, parking bays with surveillance, and carports are deemed more secure than cars parked in the driveway or on the streets. You must notify any change in living circumstances like relocation to your insurer, so your premiums are fixed appropriately (you may even have to pay less, if you have shifted to a less risky zone).


The excess payments are your part of contributions to recover your ride from any damage due to an accident. Usually, the higher the excess you choose, the lower your premium may be. However, if you select too high an excess, then you may need to bear the financial burden in the event of a claim. So, choose wisely.

Insurance type

The third-party property damage policy will cover your expenses for any damage to third-party vehicles/properties and legal liability up to a specific limit. The third-party fire and theft policy includes the benefits of the previous plan plus coverage for your own vehicle for theft and fire events.

Comprehensive car insurance includes all the benefits of previous plans, including coverage for own-vehicle damage due to accidents – the only plan to do so – and harsh weather and car replacement in the event of theft (conditions apply). So, a comprehensive policy may cost you more than the former two policies but it has much wider cover. Remember, the higher the benefits, the higher the premiums.

One important reminder here is you must honestly disclose all the information requested by your insurer at the time of policy purchase. The usual questions can include the driving and claims history of all the drivers who will use your car as well as their life circumstances. Ensuring transparency is necessary, so your vehicle can be covered for the right amount and to minimize the chances of claim rejection in the future if you make any.

While these are some of the most common factors determining your premiums, you need to remember that comprehensive car insurance is the best car insurance policy available in terms of coverage. It covers your car for broader events and conserves much of the savings you will have to spend on recovering your ride otherwise.

Related Articles

Leave a Reply

Back to top button