Your car insurance premium is calculated and based on your demographics and personal financial situation. But what impact does the value of your vehicle have on this equation?
The car you drive can either increase or decrease your monthly premium. However, this is one of many factors that insurers consider before determining your premium.Should you understate the value of your vehicle?
According to experts, insurers do not place as much weight on the value of a car. This is because clients can manipulate this figure.
It does however play a role, because insurers won’t have to fork out as much in the case of an accident regarding a less valuable car. It therefore makes sense for them to offer you a lower premium, and vice versa.
However, insurers are more concerned about the following factors:
- Demographics: Insurers will look at, among other things, your age, gender, and location. Based on their statistics, insurers have found that certain population groups are more prone to accidents than others.
- Driving Experience: This is determined by the amount of time you’ve had your drivers’ licence. Insurers often charge higher premiums to clients who are younger than 25 because they are less experienced than older clients.
- Security Measures: This may appear to be related to the value of a vehicle since more expensive vehicles normally have state-of-the-art security systems. However, most security features can be bought separately and installed in a vehicle – high or low value.
- History: Your insurer will also have a look at your previous claims history, as well as your credit history. If you claim from insurers often, this could be seen as a red flag. Similarly, if you don’t honour your credit agreements, your insurer may be concerned.
If you fair well in these categories, you will likely receive a reasonable premium. It’s important to always be honest with your insurance provider so that they can cover you adequately – nothing is worse than diligently paying your premiums but remaining underinsured.
At SmartInsure we will offer you the best deal based on your circumstances. Fill in the ‘Contact Us’ section on our website and we will contact you to assist.