Important factors that affect your car insurance premium

Do you know how is your car insurance premium calculated? Most of the time the premium can be adjusted for any discount or bonus that the insurer has assured to offer you, however in any case, these are calculated only after the insurer has fixed a premium amount that they want to impose on you.

Here are the important factors that influence the premium amount you have to for your car:

Insured Declared Value (IDV)

At any given point in time, a car has a market price associated with it. If you get into a car accident, the amount that you are compensated for by the insurance company under the comprehensive insurance coverage is directly linked to the value of your vehicle at that given point of time. For example: if you have a brand new car that you have just got out of a showroom, its value will be more than a 5-year-old car with 50,000 kilometres on it. Precisely, IDV is the value that the insurance company sets on your vehicle to get its worth at the time you apply for motor insurance.

Motor insurance policies are indemnity policies. This further means, that they just compensate you with an amount so that you can meet the financial loss you have suffered on the vehicle and nothing more. IDV is the maximum amount you can claim under a motor insurance policy in order to compensate for any loss caused because of theft or accident.

When you buy a new car and are getting insurance for it, the IDV is calculated on the price of the new car. If you have a car for which you are renewing the insurance, the IDV will be calculated considering any wear and tear that the car has had.

In case you have any accessories, such as a special music system or speakers in your car the value of these items that are additional to the price of the car. It is then added to the IDV, adjusted for any depreciation that these items might have had.

Please Note, the IDV calculation is used only for a comprehensive insurance policy and not a third party insurance cover.

• Cubic Capacity (CC) of the vehicle

Every car has a specific engine size, which is measured as its cubic capacity. The size of the engine does influence the premium you have to pay for a third party insurance cover. The premium amount is the same for a new car as for an older car because the premium is a function of the engine size and does not depend on the age of the car. You can find out the cc from the registration papers of your vehicle.

• Age Of The Vehicle

As your car ages, it loses value also goes down for many reasons. Thus, the newer models of the same car might have more value than an old used car. Along with that, the wear and tear of the vehicle makes it less valuable than a new car of the same model.

Insurance companies follow a fixed schedule to decide the premium that you will pay to have your car insured. However, for the vehicles that are older than 5 years, the insurance company and the insurer will together conclude the value of your vehicle, which will take into account the condition of the vehicle and the depreciation schedule.

If you want to have a third party policy, then the depreciation cost will not apply to your car. The premium is decided depending on the engine size only.

How to Get the Cheapest Car Insurance?

In most of the states, having auto insurance is absolutely mandatory and the penalties for not having insurance are way too high. However, badly you need it there’s no sale on car insurance.
There are ways to get the cheapest insurance rate possible, though it might take some work to find the best rates.

A lot of factors go into consideration before determining your car insurance rates. Factors like your age and gender, where you live and your marital status. Also, there are factors that affect your auto insurance rates, like the insurance company you choose to opt for, your driving record, credit score and the amount of coverage you choose, that are completely within your control.

Here are the best ways to get the cheapest insurance:

  • To get the cheapest car insurance, start by comparing rates. Go online or come to to see which company has the cheapest rates for your situation.
  • Go through your driving record and credit report, and fix both up if they’re not good. There are some car insurance companies that give you a discount if you are able to prove that you’re a safe driver by installing a tracking device in your car.
  • There are certain types of car insurances, so you can save by owning a car that costs less maintenance or cost to repair and replace. With comprehensive car insurance and collision car insurance you can cover damages to the car caused after colliding with another car or because of any other event. If your car is going to cost more to fix or replace, your car insurance rates will also be more. Also, as your car ages it becomes worth less money, contact your insurance company to see if you can get a decrease in your rates.
  • You can also save on your insurance policy by choosing the lowest amount of coverage get while still making sure that you are qualifying all your state’s legal requirements for insurance and also getting the coverage you need in case you meet with an accident.
  • Another common way to cut down your car insurance rate is by choosing a higher deductible. Deductible is the amount of money you are expected to pay after an accident before your insurance starts.
  • The final wise and safe way to get the cheapest auto insurance rate is to utilize as many car insurance discounts as possible. Car insurance companies offer many discounts, such as paperless billing discounts, good student discounts and discounts for going a certain period of time without making a claim.

Which Are The Largest Auto Insurance Companies in USA?

After analyzing thoroughly online, we concluded that the insurance market in the USA is dominated by some key players. In fact, these top insurance companies hold as much as 72% of the entire automobile insurance market. While the top insurance companies pledges to buy all the unsold shares in an issue of new policies, they have very distinct characteristics. To give you a clearer picture about the best insurance company for your vehicle, we created a list of the top and the largest auto insurance companies in U.S.

Take a look
USAA: USAA is highly regarded for their easy process for filing a claim, and also the frequent updates on the status of claims. USAA only offers its services to veterans, members of the military, and their immediate families, which means a lot of consumers will not qualify for insurance from this top-ranked insurance brand.

Geico: As per the Consumers, Geico makes it a cakewalk to file a claim and they also plan on renewing their policies.

Allstate: Allstate clearly keeps most of its customers satisfied and informed. In fact, a majority of Allstates’s respondents said they were satisfied with how easy it was to file a claim.

State Farm: Just like others, this insurer also makes it easy for the customer to file a claim and also to renew their policy. Drivers insured through State Farm reported that overall the company is a good value.

Farmers: Farmers sit in the middle of the list and is among the nation’s largest auto insurance companies. This insurer boasts of having decent ratings for satisfaction with the claims process, customer service, and value.

Progressive: This insurer has managed to earn its highest scores for the ease it offers in filing a claim and the company’s customer service. In fact, the percentage of Progressive’s customer renewing their plans is also very high.

American Family: Friendly and convenient, the American Family’s customers were said to be very pleased with the way the insurance company resolved their claims.

Nationwide: Nationwide scores in offering correct and timely updates during the claims process and also with how their claims were resolved.

Travelers: Travelers is more than 160 years old insurance policy company and is also one of the oldest insurance companies operating today. It is a good choice for auto insurance coverage and offers great rates for families with clean driving histories.

What All Is Covered Under Your Car Insurance Policy?

The cover amount offered by any insurance companies varies from the insurer to insurer, but the most common inclusions in car insurance are as follows:

· Loss or damage to your vehicle in case of natural calamities

In case of fire, explosion, self-ignition or lightning, typhoon, hurricane, storm, tempest, earthquake, flood inundation, cyclone, hailstorm, frost, landslide and so on

· Loss or damage to your vehicle in case of man-made calamities

In case of riot, strike, theft, accident by external means, terrorist attack, any damage in transit by road, rail, inland waterway, lift, elevator or air and so on.

· Personal Accident Cover

Coverage of a certain amount – as stated in the policy by the insurance company – for the individual driver of the vehicle while travelling, mounting or dismounting from the car. Personal accident covers for co-passengers are also available and can or cannot be opted, as per choice.

· Third Party Legal Liability

Protection against legal liability caused by accidental damages resulting in the permanent injury or death of a person, and damage caused to the surrounding property.

What are the different types of Car Insurance Policies?

Overall, wherever you look for in the world, there are 2 major types of Car Insurance Policies:

· Third-party Car Insurance
· Comprehensive Car Insurance

Please not that every four-wheeler insurance policy does not offer the same coverage, it depends on the type of car insurance policy you buy.

Here are the details about the type of insurances

· Third-party Car Insurance

A Third-party Policy is the most basic type of car insurance policy that aims to cover the policyholders against legal liabilities that are generally a result of an accident. Such an insurance policy often has the lowest premium.

· Comprehensive Car Insurance

If you wish to get nothing but the best kind of coverage for your vehicle, a comprehensive car insurance policy is what you are looking for. As compared to the third-party liability car insurance, a comprehensive car insurance policy not only covers the costs incurred on loss or damages to a third party’s property, but also covers the damages happened to your own vehicle in case of an accident. It also offers a range of extensive services that cannot be availed through a third-party liability car insurance policy. A comprehensive car insurance policy will cover damages caused by fire, vandalism, theft, weather conditions, and also natural disasters. Precisely, this insurance claim offers settlement in case of natural as well as man-made mishaps.

Why Do You Need Car Insurance?

A Car Insurance Policy aims to provide financial coverage for you, and possibly your kin, if you’re involved in a car accident. All the states in the US and in fact everywhere in the world ask for a minimum amount of car insurance coverage for most of the vehicles.

Take a note of the key factors that make having car insurance a mandate:

· Required By Law

The citizen laws of all countries have made it a must for all vehicles used in public spaces to have a valid insurance policy. A third-party liability policy is compulsory for all vehicles, but depending on your choice you can also decide to go for a comprehensive car insurance policy too.

· Source Of Investment

The news channels and papers are flooded with news of car crash. Whether you are at fault or not, these odds cannot be taken lightly. In such a scenario, having a car insurance policy will make sure that your vehicle is covered for the costs incurred on repairs in case of accidents. Additionally, it will also cover the policyholder for any physical injuries. In case of collision with other vehicles, the compensation amount can go up tremendously. Your car insurance policy will help you cover the costs for you in exchange for a reasonable premium, making it a worthwhile investment.

· Time Saving

Meeting with an accident can be very tiring and stressful. Every accident is followed by repairing of the vehicle, paying for the expenses incurred on repairing the vehicle of the third party, paying for the treatment of any bodily injuries by you or the third party, making claims and so on. In a nut shell, you will have to run around a lot. But with a valid car insurance in place you can save a good amount of time as the insurance company itself will handle everything on your behalf.

· Health Insurance Boost

Many car insurance policy providers offer coverage for the injuries you sustain, or injuries sustained by the fellow passengers in the car collision. If the policy you choose does not offer this cover, you can always purchase personal injury protection as an add-on cover, and it will boost your health insurance, covering things that may not be covered by your health insurance plan.