It’s time to renew or take out new insurance for your car. It may seem simple; however, before presenting the quotes with the values, the calculation of auto insurance involves a huge crossing of information and variables. Want to know how the price of insurance works? So, follow me!
How to calculate the price of insurance
To determine the final price of insurance, known as the premium, insurers assess the risk of having you as a customer. The higher the risk, the higher the price. In some cases, companies may withdraw from insuring the vehicle if they see too high a risk.
To determine the risk, a questionnaire is made with the car’s specifications, information, and customer habits. The Risk Questionnaire is a fundamental part of the calculation of auto insurance that must contain only true and correct data. If any inconsistency is identified, the insurer can cancel the insurance and, in the event of fraud in the claim, even sue the customer.
The “weight” of each piece of information in your profile is not the same for all insurers. The same make or model of car may have a different number of claims with two insurers, which makes the risk higher and the value of your premium higher in one than in the other. And several variables interfere in the calculation of auto insurance. How is the price of my car insurance calculated? Meet some of them:
The car model is one of the main items in the quotation. It is not a rule, but the greater the value of your vehicle, the more expensive you will pay for your insurance, as the greater the indemnity to be paid by the insurance company in the event of theft, fire, or collision. In addition, as mentioned above, each insurer assigns a specific risk per model, depending on the behavior of its portfolio.
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Place of Residence
The zip code of the vehicle’s overnight location is also critical in pricing the insurance. The cost will be higher if the address has many robberies or thefts. The same goes for the work zip code. A very busy or flood-prone region will result in a higher insurance cost.
Large urban areas tend to have higher crime rates, so insurers consider residents of such areas more at risk of being robbed than residents of smaller cities.
Age and Experience
The younger or inexperienced the insured, the greater the likelihood of a collision. This statistical data consider the average number of occurrences by age group of insured persons. And drivers between 18 and 25 are among the most at risk when calculating auto insurance.
Likewise, the shorter the license time, the greater the chances of a collision. For these reasons, insurance for vehicles driven by younger and inexperienced people tends to be higher than those carried out for older people or people with licenses.
Gender and Marital Status
Gender and marital status are also of great importance when calculating auto insurance. Statistically, women and married people with children up to 18 years of age are more prudent and expose themselves to lower risks than others who are single and have no children. A married mother of two will pay less in insurance than another woman of the same age, who owns the same car and lives in the same zip code, but is single and has no children.
Garage and trackers
A car parked on the street is much more exposed and subject to accidents than one in a closed garage day and night. Insurers know this and take the information into account when calculating auto insurance.
However, there are cases where the annual cost of renting a garage is much greater than the difference in the insurance price for parking on the street. Before taking out insurance, it is worth comparing the value of the premium with or without a garage.
The same goes for trackers. Often, in very targeted models, the installation of a tracking device makes a big difference in the calculation of auto insurance. Safety equipment is so effective that some insurers offer its installation free of charge as a condition of risk acceptance.
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All insurers consult different databases when pricing insurance. The more occurrences of collision, theft, score in the portfolio, or incidence of claims of the insured or driver, the greater your risk and, therefore, the higher the price of your vehicle insurance.
Customers with restrictions on CPF or names included in credit protection systems also tend to pay more. In addition to the greater risk of late payment of insurance installments, people in financial difficulties are more likely to commit fraud against insurance companies to obtain capital to pay off debts.
The greater the use of the vehicle, the greater the chances of collision or theft. Vehicles for commercial use or transport passengers – such as taxis or transport by application – tend to have the highest auto insurance price precisely because they have intense use.
The same goes for cars used to go to college, for example. In addition to thefts and robberies being more frequent in the vicinity of universities, the insured often goes out to have fun with friends after classes, which increases the risk of an accident.
Deductibles and Coverage
The higher the deductible, the amount paid by the insured in the event of a collision repair insurance claim, the lower the insurance price. On the other hand, the greater the coverage for material and moral damages, the higher the insurance price.
The number of services, such as complete coverage for windows, headlights, flashlights, and mirrors, car reservation for a period longer than seven days, or extension of the warranty on zero-kilometer cars, among others, also influence the calculation of auto insurance.
Get an auto insurance quote online to find out the price of car insurance. Compare prices, coverage, and assistance.
It is impossible to have a fixed price for insurances that evaluate the profile, as each has a different profile with different risks for the insurers. But we made a car insurance table with some prices for you to have an idea.
Getting an auto insurance calculation is easy. Just do a car insurance simulation to access your profile’s insurance values.