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6 Factors That Determine the Cost of Your Vehicle Insurance

Interested in insuring your favorite car? Be patient first, beforehand, check the total premium that will be charged to the car in question.

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Interested in insuring your favorite car? Be patient first, beforehand, check the total premium that will be charged to the car in question.

Then, you can adjust it to your current financial capacity, so that premium payments in the following years will run smoothly.

When checking, you may find the difference in costs between one vehicle insurance and another. The difference can be tens of thousands, hundreds of thousands, to millions. Why is that?

Factors That Determine the Cost of Your Vehicle Insurance

The difference in vehicle insurance costs cannot be separated from various factors. Some of these factors will be explained in the following six points:

1. The type of vehicle to be insured


The difference in insurance costs cannot be separated from the type of vehicle that is insured. Usually the more expensive the vehicle price and the new production period, the insurance premium tends to be more expensive than other types of vehicles.

Take for example, the BMW 3 series. The insurance premium between the second generation is certainly cheaper than the sixth generation.

This cannot be separated from the influence of the price of the car itself, which the new generation is definitely more expensive than the previous generation. Because, the latest generation has embedded more sophisticated features and technology to enhance the driving experience.

2. What is the use of the vehicle like


When including insurance on a vehicle, there will be options for using the vehicle. Whether the vehicle is used personally or on a business trip. This is important to note, because these two uses have different levels of risk.

The amount of insurance premium is calculated based on the level of risk of the vehicle itself. The lower the risk, the cheaper the premium charged to the vehicle. Vice versa.

Especially in the repair process later, the cost to repair a vehicle with a higher risk will automatically be more expensive. This means that the insurance company has to spend more to cover the cost of coverage.

3. The location of the residence


Who would have thought that the location of residence would also affect the amount of vehicle insurance premiums. The denser the residential area, the greater the premium charged.

Because, the risk of an accident or damage to the car is greater than those of you who live in rural areas.

The division of the territory is determined based on the zone area. There are regions 1, 2, and 3. For those who live in Certain city, for example New York, you will be  area number 2.

The division of the territory will actually make it easier to assess the risks to the vehicle. So that the insurance company can estimate the cost to cover damage to the car, both large and small.

4. The type of insurance attached to the car


Car insurance consists of a type of Total Loss Only (TLO), the cost of which is covered when the car is lost. Meanwhile,  comprehensive type will cover all damage to the car. And of this type, the premium for a comprehensive one is clearly more expensive.

The fee paid will be even more expensive if the insured vehicle is an expensive vehicle. However, don't worry, because if you calculate it, the insurance fee paid by the company is greater than the insurance premium.

Therefore, pay the premium in an orderly manner. Don't hesitate to continue insurance when the validity period has expired to ensure vehicle safety.

5.  There is an additional guarantee fee


In vehicle insurance, policies are allowed to add other guarantees, such as  personal accidents.  As the name suggests, this extension of coverage is addressed to self or the driver who drives the vehicle.

If bad things happen, the insurance company will be responsible for part of the medical costs until recovered. So, the portion of personal cash that comes out becomes less.

With this additional guarantee fee, the premium paid is clearly more expensive. Because, you have the opportunity to get multiple benefits.

6. Age of the vehicle itself


Vehicle insurance has its own rules regarding the age of the vehicle that can be insured. Usually the older the vehicle, the more expensive the premium because the risk of damage is greater than that of a newly purchased vehicle. Starting of the engine, the body, the legs of the vehicle, everything can be said to be more fragile as the car gets older.

In addition, the  spare parts  attached to the car in question also affect the amount of premium. The more expensive and rare, the more expensive the insurance premium.

For those who want to minimize premium payments, you should insure a car that is only one or two years old. No need to insure an old car, especially if you rarely use it. Because, this is tantamount to an act of waste.

Calculate Premium Costs Carefully

There are six factors that determine the amount of insurance premiums on your vehicle. Given the cost component is not only one, it is better to calculate carefully and compare it with the benefits obtained.

In this way, vehicle insurance can provide maximum benefits, both today and in the future.
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