It can be difficult to maintain your car, especially with the fluctuations in the policy premium at the time of your car insurance online renewal. These changes in premium are affected by a number of factors, especially as your car keeps ageing every year.
But does a car insurance premium increase every year? The answer to this question can be found in the following article, which discusses the different factors responsible for a possible change in the policy premium cost every year.
Reasons Why Car Insurance Premium Changes Every Year
Your Car Type
The make and model of every car is different and so is its premium. For example, a hatchback car will come with lower premium rate in comparison to a luxury car because the spare parts of the luxury car are more expensive than that of the hatchback.
Insured Declared Value
The IDV of any car is its market value. Whether you have a private or commercial vehicle Insurance policy, your insurer will reimburse you on the basis of this amount for total car damage or vehicle theft. Premiums are higher for cars with higher IDV.
Changing Trends in Insurance Industry
One major reason for car insurance price increase is the changes in trends of the insurance industry. These changing trends are based on increase in fraud cases or surge in claims filed, which may result in insurers increasing the premium rates for financial stability and maintaining their profitability.
Car Age and Depreciation
The older your car gets, the more it depreciates due to general wear and tear. This depreciation results in a lowering of its IDV, implying that IDV is inversely proportional to your car’s depreciation. With the help of an online car insurance premium calculator you can find the premium you have to pay based on your car’s age.
Your Geographical Location
Living in big cities generally increases the risk for car owners, which means if you are living in a metropolitan city, your car insurance premium may be more than if you are a resident of a small city or town.
Your Claim History and Driving Records
If you have raised multiple claims in the previous year, your insurer may increase the premium rate for the upcoming year based on your claim history. Again, your driving record plays an important role in determining your policy premium rate. The more records you have of breaking traffic rules, the greater the chance of your insurance premium being higher.
How to Lower Car Insurance Premium Rates
Here are some tips that will help you lower your car policy premium cost:
- Avoid filing a claim for a minor reason.
- Ensure that you can make use of the No Claim Bonus at the time of policy renewal.
- Avoid renewing the policy after it has expired.
- Install an anti-theft device in your vehicle.
- Opt for a higher deductible amount.
- Take advantage of any available discounts by comparing policies before renewal.
- Maintain a clean driving record, as avoiding traffic violations and accidents can help keep your premiums lower.
Conclusion
There is always a chance of your car policy premium fluctuating every year. With the precautions mentioned above, you can effectively reduce premium costs and continue enjoying financial safety from your policy without breaking the bank.