Which of the following affects one’s car insurance premium?

Author: DK Bagoria

Updated on:

Which of the following affects one’s car insurance premium? So there is a good place to start. Some major factors may affect car insurance premiums.

The following are the factors that can affect the car insurance premiums for a driver’s vehicle. How do they affect their auto insurance coverage?


1. IDV of Vehicle (Deductibles)

Firstly, your vehicle insurance is decided by your car make, model and IDV value of your car. IDV stands for the insurer-declared vehicle.

IDV decides your average car price value. The insurance company will have to pay IDV if you lose your vehicle. 

Also Read: What is IDV in Car Insurance?

What is IDV in car insurance?

Insured Declared Value (IDV) In Car Insurance, Insurance companies offer a declared value to cover a car’s replacement value. This means that a car worth, say, $5,000, will cost only $5,000 to replace after an accident, no matter what it actually costs the insurance company.

2. Demographic Information

Demographic Information is the factor in deciding your car insurance premium. It mainly depends on your Age, Gender and living area.

If you are young, then you will have to pay more than aged people. Less driving experience can cause accidents while driving, so your insurance might be high.

Females drivers pay less for car insurance because they drive the car significantly less than male drivers. So insurance company gives a discount to female drivers.

Car insurance premium also varies depending on where you live and park your car. In an urban location, there are more chances of car accidents, theft, and other losses than in ruler areas.

3. Inflation


Inflation is one of the leading factors of high vehicle insurance. Every people know the inflation rates of the country’s economy; inflation increase year by year.

Suppose any car gets damaged after three years of manufacturing date. When it comes to fixing the car, new car parts and accessories cost more than their old value to the insurance company.

4. Coverage Level

The Coverage level you choose may affect the cost of your car insurance premium. Car insurance covers comprehensive coverage, collision coverage, uninsured/underinsured motorist coverage, medical payments, personal injuries, etc.

Also Read: 7 Best ways to Lower Car Insurance

Some optional like towing and labor costs, rental reimbursement, and sound system damage coverages also affect the insurance premium.

5. Your driving habits

If you had more driving accidents in the past, there might be more chances of a high insurance premium. Car insurance premium for a new driver is not so high.

Long travel drivers of trucks and logistics pay a high premium as compared to small drivers car of city driving

Tips for reducing the Car Insurance Premium

  • Check for deals
  • Reduce your mileage
  • Shop a new policy instead of renewing
  • Customize your coverage
  • Expand your deductibles

What is a car insurance premium?

A car insurance premium is what you pay to keep your policy in force but have you ever wondered what effects that cost? Let’s look at some factors that may affect your premium first.

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