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how to calculate car insurance

20 February 2023

Before making or thinking about any insurance policy, property owners always start looking for the material cost to know what they are offering, especially in car insurance, and wonder how car insurance, its sequences, and subsequent accessories are calculated in favor of the insurance company.

All the previous questions are normal in the beginning stage, especially for people who are not interested in knowing details except in the financial aspect, but we at Brokerage Insurance must clarify that the financial cost is only part of the insurance policy, but the internal details of the policy make you completely satisfied with what is in front of you in the policy, so let's move on to more details about the cost of calculating car insurance.

What factors should be considered while asking how to calculate car insurance?

Before looking at how to calculate car insurance, you should consider in advance some important points that help you determine the realistic and actual cost, namely:

  • Narrow down the best options to insure your car and determine how much coverage you'll need next.

  • Get quotes from many insurance companies to find out the price estimates, what suits you for your car, and the nature of the business that you need to insure.

  • Age, driving history, place of driving, and license date are all factors that help in estimating the amount of car insurance.

  • Depending on the type and age of the car and the insurance company, the cost of car insurance can vary annually for the same driver.

It is useful to see some of the initial car insurance companies quotes for models that you are considering buying or that you already own, and if you already have the car mileage and maintenance costs may be one of the factors affecting the cost, you should include car insurance costs when calculating the total cost of car insurance.

Insurance prices and costs vary depending on the type of car you will buy, your age, the extent of the risks you are expected to be exposed to, and many other factors that we will discuss.

How to calculate car insurance

In order to know how to calculate comprehensive car insurance, insurance companies usually put the cost value of insurance through a simple equation:

Insurance Value = Market Value of the Car * Premium Percentage * All Stamp Expenses

To get the most accurate estimate of your expected car insurance cost, you can follow these steps:

  • Narrow down your favorite car choices and choose the right car for you.

  • Determine how much coverage you need, in case you are buying a new car, it is best that the insurance policy is comprehensive for collisions and accidents, which covers damage or loss of the car.

  • Get quotes that fit your car type and the amount of coverage you need.

Factors affecting the cost of car insurance

Car make and model are not the only factors that go into a car insurance quote, other factors include:

  • Personal factors such as age, gender, and marital status, for example, if you are under 25 you will get higher car insurance prices on average compared to any other age group.

  • The more comprehensive the coverage, the more likely it is that the price of car insurance policies will rise.

  • Driving records: Getting a lot of violations as a result of an invalid license or speeding violations is one of the reasons that reduce the cost of car insurance.

  • Credit score; A credit-based insurance score is determined by factors such as payment history and outstanding debts, but not personal information such as income or employment.

  • Your car insurance history, including whether or not your car insurance has expired, previous insurance claims as well, and how long you have been with your insurance company and last insurer.

Why are some car insurance prices higher than others?

Some cars cost more insurance than others because carriers use statistics on collisions and theft to help determine prices for each type of car individually.

So if your chosen car has higher rates of theft or associated accidents, the costs of the insurance policy are likely to increase in this case.

Here are some of the characteristics that affect how car insurance is calculated:

  • Car price: In general, the higher the price of the car, the more expensive the insurance policy will be, so in most cases of modern cars as well as cars with high prices, it is better to obtain comprehensive car insurance that guarantees you comprehensive coverage against accidents and theft, as well as can compensate you in the event of theft or crash of the car for damages.

  • Car Model Type: High-end models often use parts made of carbon fiber and other specialized materials that are expensive to repair, raising the cost of claims in the event of damage to the vehicle.

  • The level of safety in the car: If the level of safety in the car is high, it means that it is expected that the insurer and the car will be protected from future accidents and collisions as well as the occupants of the car at any time, which means that injury claims become lower and losses to the insurance company.

How to reduce the price of car insurance premiums?

Here are some ways that can help you reduce car insurance premiums:

1. Avoid making small claims

The simplest way to reduce the car insurance premium is to earn the No Claim Bonus (NCB) by not submitting any claim in the policy year and to be able to achieve this, you should not make simple claims or compensation and try to amend the matter on your part if the amount is small, hence we advise you to be careful while driving to avoid accidents and small scratches.

2. Install anti-theft devices in the car

Installing anti-theft devices is an important way to protect cars from theft, in addition to that, it helps you reduce the insurance premium obligated by up to 5% of the annual insurance premiums.

3. Renew the car insurance policy on time

With the timely renewal of the car insurance policy, you can avoid falling into] risks, accidents, or any other mistake which will ultimately save you while re-checking the car for renewal and will allow you to take advantage of the policy at the old price and avoid the increase in premiums.