What Influences Your Car Insurance Premiums?

It is a given fact that knowing the details is certainly advantageous for individuals who are entering into different types of transactions. This is also the case when it comes to car insurance. Since the amount of premiums significantly affect the cash flows of policyholders, identifying the factors that affect car insurance premiums is absolutely useful in decision making.

Car insurance premiums are affected by inherent characteristics that policyholders cannot totally adjust according to their preferences. This includes the age, gender and marital status of the policyholders. Insurance companies maintain varying premium differentials that are appropriate to these groups according to various studies that were conducted. As per the age factor, drivers who are younger than twenty five years old and above sixty years old are revealed to be more susceptible to vehicular accidents. As a result, insurance premium rates for individuals in these age groups are typically higher.

When it comes to gender, women are considered to be statistically careful drivers compared to men. This is the reason why female policyholders shell out less premium expense compared to the male ones. Individuals who are married also are given lower premium quotes as compared to single individuals.

There are also factors that are entirely controllable and can be the result of the actions and decisions of the policyholders. This includes the type of vehicle, driving style and record, credit rating, professional responsibilities, profession, mileage counts and car safety features.

Insurance companies tend to increase the premium rates for high-end automobiles that are categorized as high-performance, sports cars, rear-engine models and intermediate performance. It can be formulated that more expensive cars commands higher insurance premiums. This is due to the fact that these car types have more expensive spare parts and is more susceptible to theft.

Driving styles and record also play an important role in car insurance premiums. Insurance companies investigate and examine the driving profiles of their policyholders in order to correspond with the insurance premium offers. People who have traffic violations and accidents in their driving records tend to have higher premiums. Credit rating also has an impact to the amount of car insurance premiums. Insurance assumes that individuals who do not possess good credit rating are financially negligent and this can be manifested in their driving style as well.

The profession of the policyholder also has an effect in the insurance premium rate. Statistically, there has been an observed correlation between risk and occupation of policyholders. If the occupation requires long distance travel or travel in accident-prone locations, the premium rate charges are higher. Premium rates are cheaper for policyholders who work in the office or urban institutions.

Low annual miles driven by the policyholders also reduce the probability of being in a vehicular collision which in turn, results to lower premiums. Vehicles which are intended for business purposes also have lower insurance rates as compared to vehicles that are operated for commuting purposes.

Lastly, car features can also have influence in the rate of the insurance premiums. A vehicle which has safety features and theft prevention gadgets installed in it also cuts the insurance premiums. These features include airbags, anti-lock brakes, chassis quality, tracking devices and burglar alarms.

What Affects The Costs Of Health Insurance Premiums?

If you are in the market to purchase a health insurance policy, you may be baffled at the array of prices of similar policies. There are a number of factors that determine the premiums on your health insurance policy. Each health insurance company will have their own actuarial team that determines the prices and classes of risks for each applicant. The applicants risk is a large part in what determines their risk class, but there are other aspects which causes fluctuation in premium prices.

One of the major factors that can raise health insurance premiums is the use of tobacco. Tobacco has been known to cause a number of health ailments that includes cancer. This factor can significantly increase the cost of health insurance. Knowing that cancer and smoking will decrease the average lifespan of a person, insurance premiums will rise. In some cases, health insurers will provide an incentive to help the insured quit smoking and cover smoking cessation products including nicotine gum, the patch, etc.

To qualify for health insurance, the applicant must be in reasonable health as well. This includes a proper height, weight and body mass index. People seeking coverage with a high body mass index, will have elevated premiums compared to those with an average BMI. Some insurance companies will not insure an obese person as it is not considered an insurable risk. Applicants looking to have the lower end of the premiums should be in the best health possible prior to applying for coverage.

An applicants age can have an ample impact on the price of coverage. The majority of younger people have minor issues with health issues. These may include common colds, a flu, ear infections, small accidents, etc. As a person ages, the likelihood of that person going to the doctor, needing critical care or becoming diagnosed with a chronic disease increases. The cost of major health issues becomes riskier for the company to insure. This is a direct result of increasing premiums as the person ages.

Pre-existing conditions for applicants will also raise the premiums on health insurance costs. Pre-existing conditions require more visits to a practitioner and greater risks for the insurance company to cover related claims to the pre-existing condition. Some insurance companies will only cover certain aspects of the pre-existing condition or won’t cover anything at all.

Another factor that may increase an applicant for health insurance premiums would be their gender. Unlike life insurance, women usually pay higher premiums than men for coverage. The reasoning behind this is due to the fact that women go to the doctor more often, need an OB/GYN specialist, take more prescription drugs, have maternity costs and are subjected to certain chronic diseases. The average cost to deliver a baby range anywhere between $10k-$15K of which doesn’t include the prenatal and postnatal medical care.

Other risks that the insurance companies factor in when determining premiums for the applicant are their lifestyle choices. These can range from a number of different topics including their profession, marital status, where they live and more. Insurance companies will take in all factors when determining a reasonable cost for insurance. For obvious reasons, a race car driver will be a much higher risk than an accountant. Insurance companies also are aware that married couples will live longer than single people. Other factors including the area code in which the applicant lives will be represented in the premiums. People that live in the same areas, tend to have similar eating, exercise and living habits.

Insurance premiums can be expensive, but insurance companies must manage risk properly and set a proper premium on applicants. Higher risk applicants will have higher premiums. Some variable that an applicant can control is eliminate tobacco use, exercise regularly and eat right for a healthy body mass index and have a safe occupation. Other factors including pre-existing conditions, family health history, gender, etc. the proposed insured won’t have control over. If an applicant was to choose higher deductibles, then the premiums would decline. However health insurance can be costly, but if the right coverage isn’t in place, a person could be exposed to a substantial risk.

A Step-By-Step Reduction of Your Car Insurance Premium

That is why we wait for the sale season, use discount coupons or shop online – all in an effort to bring down our expenses. What about our car insurance premium? Is there a way to bring it down too?

We care about it. That’s we’ve made this step-by-step guide on reducing car insurance premium.

Car Insurance Premium – Saving VS Coverage

Your car insurance premium is always a considerable sum no matter how cheap your car was in terms of its cost. Being a mandatory requirement (the Motor Vehicles Act mandates a car insurance cover), the cost is unavoidable.

Thus, it is with a heavy heart that we part with our money when buying or renewing our car insurance plan.

It is possible to customize the premium amount of your car insurance policy to some extent. The idea is to not miss out on future coverage in the race of reducing premium costs for the present.

Step 1 – Determine the optimal Insured Declared Value (IDV) of your car.

The IDV of your car is in effect the maximum Sum Assured of your car insurance plan. It is the amount (calculated as the car’s market price minus the depreciation) which is payable to you if your car is stolen or your car is damaged beyond repairs.

As is obvious, the premium rate is determined on the quoted IDV. The IDV varies across insurers and so does the premium rate. The option to select the IDV is solely on you. This chosen IDV should be optimal. Too high and you unnecessarily pay a higher premium, too low and you get a small claim. A balance must be reached and an optimal level of IDV should be selected.

For selecting the optimal IDV, you can deduct the depreciation rates standardized by IRDA from the car’s market price.

Vehicle’s age Rate of depreciation

Less than 6 months 5%

6 months to 1 year 15%

1-2 years 20%

2-3 years 30%

3-4 years 40%

4-5 years 50%

Assess your IDV as per your car’s age and settle on the optimal level.

Step 2 – Consider the coverage available.

Once you have identified the IDV, look at the coverage provided by various plans. Usually a comprehensive policy has two coverage parts – third party cover and own damage cover. Also, there might be riders available which allow you to customize your plan and enhance the coverage. Special consideration should be given to such riders as adding them would increase the premium incidence.

Riders should be chosen based on your requirements. For instance, a zero depreciation cover works wonders for newer cars while an engine protect rider is helpful if monsoons causes water-logging problems in your locality and endangers your car’s engine. Cut down the frills but opt for riders which pertain to your requirement and you can substantially lower the premium.

Step 3 – Assess the optimal premium based on the cover.

The premium for a third party cover is fixed by the IRDA. It is the own damage premium which varies across insurers and is fixed on the IDV of the car. Riders too increase the premium. So, compare the different premium quotes on two parameters – the computed IDV and any additional rider benefits.

Step 4 – Utilize policy discounts and accumulated No Claim Bonus (NCB).

If you are transferring your insurance plan to a new car or renewing your car insurance plan, you can reduce your premium if you have any accumulated NCB in your previous policy. NCB is allowed if the policyholder does not make any claims in the last year. This NCB lowers the premium.

For those who are buying a new car insurance plan, there might be discounts in a policy which should be explored for reducing the premium.

Step 5 – Portability

Blindly sticking to one insurance policy when other plans are offering a lower premium for the same level of coverage is foolish. You should constantly review your car insurance plan on each renewal and if a cheaper substitute is found you should port your policy and enjoy lower premiums.

Following these steps would definitely result in a much lower premium than you were originally charged. This little nugget of wisdom is, therefore, sure to make your pockets and consequently you happy.