What are the factors that affect the rate of car insurance policies?


Car insurance companies offer different rates of insurance policies. You can shop online so you can compare their rates and to have an idea of the different types of car insurance and the factors that affect car insurance rates.

The biggest determining factor is the type of your car. The age of the car, make and model, and value are the top considerations. High-priced cars, new cars and cars with high rate of theft will require a higher premium.

The other top factors are your driving record, coverage, claims history, vehicle use, occupation, credit score, geography, deductibles, and demographics such as age, gender marital status. These are the considerations by car insurance companies.

Another important fact to consider is the type of car insurance you will be applying for according to your needs, lifestyle, finances and preferences. There are four types which range from the most expensive to the cheapest one.

The Full Comprehensive Car Insurance is the most expensive and the most common type because it insures the car owner against all kinds of event such as accident, fire, theft, and whether he/she is at fault with the accident or not and the other party has no insurance. When applying for this you must read the insurance policy carefully because some companies only insure 80% of the car’s value instead of 100% as a measure against fake loss.

The cheapest is the Third Party Insurance. This is purchased by people who are driving old cars. These cars may have little or no value at all. It only covers situations wherein the driver is involved with an accident with another driver.

The middle type is the Third Party, Fire and Theft Insurance. This is purchased by drivers whose car still have a level of intrinsic value but already paid their car loans. Like the Full Comprehensive Car Insurance, it will cover situations like fire and theft but it will not cover an accident which only damaged your car or with another driver and you are not at fault regardless of whether the other driver has sufficient insurance to pay for your car.

The fourth type is the Specialized Car Insurance. Drivers who are driving classic cars or over 25 years old car are insured with this. ‘Classic’ cars have the same benefits like Full Comprehensive Car Insurance but there is a limit to the road mile of travel per year.