There is a huge difference between the cheapest car insurance and the most expensive one. But why? How is the price calculated? Can your insurance premium rise from one day to the next? What to do if your budget doesn't fit any car insurance at all?
What determines the price of a car insurance?
The price of a car insurance mainly depends on the warranty. A comprehensive insurance would obviously cost way more than a basic third party insurance.
But the price of the car insurance also depends on lots of factors, which you can sometimes influence.
Engine and weight of your car
The more powerful your car is, the more expensive your insurance premium will be. Cars with large engines, such as sports cars, are way more powerful and can cause more damage than city-dweller cars. If you decide to buy a smaller and less powerful car, your insurance premium will automatically be less expensive.
Personal or professional use
If you are using your automobile for professional purposes, to meet a client for example, you'll pay more than if it was for a personal use.
Young drivers are more involved in car crashes than experienced drivers.
That's the main reason why the insurers raise the insurance premium when it comes to young drivers.
Where you live
It might be ridiculous to some of you, but it actually matters. For example, if you live in a busy city where there are tons of accidents every week, you will pay more than if you were living in a small village.
For those who don't know this system yet: If you drive during a year without causing any accident, your rate decreases (bonus).
On the other hand, if you cause an accident, it increases (malus). The higher the degree, the more expensive your auto premium is. The lower it is, the more advantageous your premium will be.
If you decide to find a new insurer, this one will take your bonus-malus from your last insurance broker. But the new insurer can also recalculate your bonus-malus, based on your car accidents certificate (this one mentions the number of accidents you had in the past 5 years).
For example, some insurers would give you a discount if you drive less than 10.000 km/year. Other insurers would propose a 'kilometer insurance', the insurance premium is calculated on the exact number of kilometer you travel.
This represents the maximum amount an insurance company will pay if an insured asset is deemed a total loss. First option: The insurer will refund you an amount equivalent to the original value of your goods. This option is obviously really expensive.
Second option: This time, the variations of the market will impact the amount refunded. For example, the value of your car decreases by 2% each year. 5 years later, if your car gets destroyed, you'll be refunded for only 90% of your car value. This option is cheaper.
How often do I have to pay?
Would you rather pay your insurance annually, every three months or biannually? Some insurers will charge you for this option.
Price increasing after indexation
Your insurer is bound to inform you regarding any price change. If you don't agree with the modification, you have the possibility to put an end to your contract.
What happens if the insurance premium is way too high?
You can't find an affordable car insurance? First, find out why your insurance premium is so high, and if you can do anything about it. For example, you can sell your sports car for a city one.
You caused three accidents this year? It might be time to get some driving lessons or to be more careful on the road. You can find lots of ways to reduce your insurance premium.