Insurance companies identify car insurance premium rates based on calculated risks.
Of course, there are a lot of factors that they need to consider in identifying the possibility of an accident occurring. And while older cars may pose greater risks on the road, a car that’s only a year old, or even less, is not exempted from such.
The vehicle itself is not the only thing that insurers will look into. More frequent than not, they also check the manufacturer’s warranty on certain parts. Those that are warranted for only 6 or 12 months indicate an absolute expense on their end in case a claim is filed.
Therefore, insurance providers are more likely to have an increase in car insurance premiums to cover such liability. Let’s look at the following:
Most vehicle owners tend to assume that having no claims in the prior coverage period means paying for the same amount of premium upon renewal. While it truly happens, it rarely does. Several external factors come into play in premium calculations.
For instance, if you live in a neighborhood where car theft had significantly increased, you’re probably going to pay additional money for your next year’s car insurance coverage.
Insurance providers definitely have more than a dozen clients. While you may have filed a single claim only, some parties are possibly making multiple claims. In case the total liability claims processed exceeds what was initially projected, the insurance company will balance this by having a premium increase for all customers during renewal.
Vehicle’s price and availability of parts
Theft is associated with how much certain commodity values. Vehicles that will sell for a higher price have a higher risk of being robbed. But models that are very common and easy on the budget also pose the possibility of its parts being discontinued. Whichever scenario it is, an insurance premium hike can be expected.
While it is not a common factor for all, some insurance companies include credit ratings in determining premium rates. A bad credit score doesn’t deter you from having the best possible coverage the market has to offer. Only, it may force you to pay a highly significant amount than most drivers would.