What Determines a Car Insurance Quote?

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Buying a vehicle insurance, whether is a third party liability-only or a comprehensive coverage, is extremely important in today’s time. Even the most cautious driver can be on the receiving end of an accident and get afflicted with wounds that require medical attention. However, with the bevy of vehicle insurance policies available online, it is essential to compare and contrast all of them before selecting the best car insurance for your needs.

To understand how insurance companies calculate premiums and develop a car insurance quote, it is imperative that you know what factors go into determining them. Here are some of them:

  • Purpose of the Vehicle

Will your car be used solely for personal reasons i.e. commuting to work, or will it be used for commercial purposes? Cars used for personal reasons incur lower premiums than ones used for commercial gain.

  • Insured Declared Value

Vehicle insurance companies always determine the value of the vehicle or its insured declared value in order to arrive at a car insurance quote. Of course, the value of the vehicle takes into account the manufacturer’s selling price. Which means, the more expensive your car model is, the higher will be its premium.

  • Type of Fuel Used

Although diesel is usually less expensive than petrol, when it comes to vehicle insurance, diesel cars are charged a higher premium than its petrol counterparts.

  • Spare Parts

If your motor is fitted with rare spare parts expect to pay a higher premium on your vehicle insurance.

  • Engine Capacity

Cars that run on over 1000cc incur lower premiums that those that operate on an engine capacity of above 1000cc.

  • Vehicle’s age

How old is your convertible? The older your car, the lower will be its premium. In fact, some insurance companies define a car as a classic if it’s more than 10 years old. A classic car gets a much lower premium than its newer doppelganger.

  • Location of Registration

Every vehicle insurance provider has deemed certain areas as accident-prone zones. If your car happens to be registered in this accident-prone area, then get ready to pay a sizable car insurance quote. Usually, vehicle insurance providers charge higher premiums to policyholders whose cars are registered in urban areas and large metropolitan cities than those residing in rural areas. This is because the chance of theft, vandalism and accidents are higher in densely populated regions.

Although there are other factors that come into play when insurance companies decide on your vehicle insurance quote, the above are the ones that make a significant impact on your premium.

It may be tempting to buy the cheapest policy while shopping for car insurance online but that would be a mistake. You need to check the claim settlement ratio which indicates if the company will actually help you in times of need. There’s no point paying a low premium if the insurer doesn’t compensate you in the event of a theft or accident.

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