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How Car Insurers Calculate Your Premium

Ever wondered how your car insurance premium is calculated?

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Make / Model of the Car

Types of cars vary greatly – from Luxury SUV’s, a family sedan to a contractor’s faithful old bakkie. It can hence be expected that the make and model of a vehicle have a big influence your car insurance premium. Some vehicles would cost a lot more to repair while other cars could be more at risk of being stolen or hijacked. Remember, each car make / model has its own claim record and the insurer calculates the vehicle premiums based on its own claim experience.
The age of the vehicle will have a definite influence. Older cars are often cheaper to insure than their more modern counterparts. Older cars may be less expensive to replace, but it may be difficult to get parts for the vehicle.
Big engine capacity, high speed and younger drivers are usually associated with sports cars and will raise the premium significantly whereas safety features offered with a particular vehicle would in turn positively influence your premium.

Type of Insurance Cover

Two main types of car insurance cover exists in the market and some variations of the two main types.
Comprehensive insurance is very extensive and covers injury to other people or damage to their vehicle / property in an accident as well as your own vehicle for accidental or other damages, theft and hijack, and some ‘acts of god’. It is therefore the most expensive type of car insurance.
Third party insurance is quite limited and is also the cheapest of the options. Generally, it covers you for damage to another party’s vehicle and costs associated with the accidental death or injury of third parties involved in the same accident, but you are not covered in any way.
Some insurance companies may also provide a discount on your car insurance if you also maintain other policies, such as homeowners’ or life insurance with the same firm.
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