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How car insurance rates work

Insurance companies look at specific factors when they rate cars. Although there are a few differences in the way they do it, you will find that most of the factors they look at are generally not different. The age of the car, the driver’s experience, the type of car, the age of the driver, the car value and loss experience are some of the main things that insurance use to determine car insurance rates. Learn more on how car insurance rates work.

How car insurance rates are determined

Age of the car Your car insurer will look at the age of your car when they calculate the premium. You are likely going to pay more for a new car than a used one because a new car has got a higher value.
Driver’s age and driving experience Young drivers pay more premiums because they are seen as inexperienced and at higher risk. Older drivers on the other hand, pay less. If you have been in an accident before, you will pay more than a driver who has a clean driving record. Insurance companies will calculate your loss experience to determine a suitable rate. Usually, a high loss ratio will result in higher premiums.
Type of car Fast sports cars are usually more expensive than simple cheap cars. This means that you will pay more premiums for your fast and expensive sports car. This is also true for latest car models that are being manufactured these days. The type of car will determine the value of the car, thus affecting the premium.

Women drivers

Most companies have got special rates and discounts for women car owners. Naturally, they are seen as careful and less reckless on the road. If you are a woman in her fifties driving a simple sedan-shaped car, you will pay far much less due to the type of car that you are driving and also because of your age. On top of that, you are a woman. Therefore, you end up paying up to 15% less premiums than your male counterpart.
Excess amount You pay less premiums if your excess amount is higher and the opposite is true for lower excesses. Paying a higher excess means that you are a responsible client, therefore you get rewarded and pay less premiums. The only problem is that when you submit a claim, insurers will only start paying after you pay the excess.

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