Car Insurance Prices: 4 Main Factors that Determine your Cost

Car Insurance Prices: 4 Main Factors that Determine your Cost

Posted on December 19, 2022

Noticed a hike in your car insurance lately? It can be irritating to deal with, especially if you didn’t know it was coming. That's why information is always good to have. There are many factors that determine your insurance premium, and in this article we’re going to go over some of the biggest ones to watch out for. 

Location

You may not realize it, but where you live is actually one of the biggest factors in the calculation of your insurance premiums. This is because the primary calculation of any car insurance prices are risk, meaning the more likely you are to get into an accident and utilize the services of your insurance broker, the higher premiums you pay. 

For location that means that if you live in a densely populated urban area, you’re going to get hit with a much higher insurance premium than somebody living in an unpopulated country area because statistically speaking, the majority of road accidents occur on city streets. If you’ve recently moved closer to the city center then that would explain a sudden increase in your car insurance rates. 

Vehicle

Another factor where risk is calculated is the type of car you drive. Like your location, different types of cars are statistically more likely to get into accidents than others. Sports cars for example get into more accidents on average than sedans. The other reason that sports cars will get hit with a high premium is that should they get damaged they will be much more expensive to fix than other types of car.

Record

One of the clearest signs of risk is your personal driving record, if you have several incidents marked on your record then the insurance broker is going to view you with a significant risk and give you a harsher insurance premium than average. 

You could also have an opposite problem, if you have no record at all, as in you’re just starting to drive for the first time then you’re considered an unknown risk, and the insurance company will also give you a harsher insurance premium, normally until you’ve been driving for at least 5 years. 

Policies

When you sign up for insurance there are tons of policies that will come into play when determining the costs. Insurance companies are a business, and while you’re legally required to have car insurance, the companies are still trying to compete with each other, so there are many promotional tactics and discounts that may lead to a reduction in your insurance premiums. If one of those policies has expired or been invalidated it could explain a rise in your insurance costs. 

Thanks for reading. Hopefully now you have a better understanding of the main factors the influence car insurance prices. If you have any more questions, please contact us here.