What Makes Your Car Insurance so Expensive?

27, Dec 2014 by Janica in Car Insurance       No Comments

Car Insurance expensive

Car insurance is one of the most expensive outlays for people each year, in many cases it is in fact the most they pay out on a single transaction. Having spent a significant sum of money on the car itself, it’s almost a kick to the stomach to then shop around for annual insurance and have to pay out even more just to legally drive on the roads.

Insurance isn’t there to just sap your bank account and fund the government, it’s there to make sure that people who are on the roads are legally allowed to be there and that they are covered in the event of any accidents involving other road users or as a result of road conditions or other hazards.

The question remains, however, why is car insurance so expensive? After all, there are different car insurance rates by state or county, country, continent, all kinds of things. There are actually five major contributing factors to the varying prices, which are:

Location

As touched upon briefly before, your location can significantly affect the amount you pay each year in car insurance. The insurers store details on where car crime, accidents and vandalism are high and the locations with the worst rates are likely to cost drivers more.

Drivers, however, can manage this by keeping the car in a locked garage rather than just out on the street and fitting some kind of alarm or immobilizer will also help to reduce the cost. Both of these suggestions will reduce the potential cost because they show the insurers that you value your vehicle and you’re doing everything you can to keep it secure.

Age

Insurance data shows that those aged 25 and under or 65 and over are the most likely to be involved in an accident, and, as such, are most likely to make a claim and their premiums are often significantly higher than others as a result.

Steps can be taken to overcome the price-hike, including taking a Pass Plus-style course as soon as possible after passing your test to show that you have developed experienced skills early on and are less likely to be nervous and reckless.

Occupation

A lot of occupations can affect your insurance because many will involve you driving long distances as part of your job, increasing the likelihood of being involved in an accident. If your actual job title could be interpreted in a number of different ways, such as an IT consultant, computer programmer or systems operative, for instance, keep trying the titles until you find one with a cheaper insurance premium. However, make sure you don’t end up lying about your profession for insurance purposes as this can be seen as fraud.

The Vehicle

In the majority of cases it’s understandable that the type of car you drive affects your insurance cost, but this again has factors involved such as age and location that could throw the whole theory out of the window.

Powerful cars are often more expensive to insure because the drivers are tasked with controlling that power, and young drivers with little experience on the roads should avoid this kind of car and opt for something more practical and less powerful for lower insurance costs, slowly building up their driving experience until the time is right for a bigger model.

Gender

Yes, being male or female can in fact affect your insurance. It’s said that women are statistically less likely to be involved in serious car accidents and as a result their premiums are often lower.