Getting a new car is definitely one of the most exciting things in life. From being able to pick a few friends up for coffee, to driving your significant other out on a date, going on a road trip with loved ones or just humming to your favourite song on the radio on the way back from work; these simple pleasures are made possible when you own a car.
“With great power comes great responsibility” – Inevitably, there are some duties that follow after buying a car, such as purchasing car insurance. It is mandatory for every vehicle owner in Malaysia to have motor insurance. But the question is, do you know what type of car insurance you are paying for? How do insurance companies price the premium you pay?
In this article, we will share with you on a few things that will increase your car insurance premium and tips on how to avoid paying so much:
Malaysian drivers with bad credit score or a history of several insurance claims in a year tend to have higher insurance premiums in the following year. The chances of your premium surging up is pretty high, particularly if the accident is caused by your mistake.
However, there is still a chance whereby your premium will be increased even though you were the victim. This is because statistically you possess higher risk of getting into another accident and at the same time, you pose more insecurity to your insurance company. The harshness of the accident may range from a scratch in paint to a totalled car. Don’t be surprised at a rate hike in premium as your insurance company had to fork out a larger pay out for your previous accident claims.
Living in an area with high crime rate at Malaysia can escalate your premiums quickly. If your car is stolen, you are very likely to make a claim to recover the costs.
Since the insurance company will have to pay out on this claim, you are highly likely to experience a rate increase. So, the more likely you are to become a victim of auto-related crime, the more risk you present to your auto insurance provider. Higher risk will then automatically lead to higher rates.
Besides that, the location of where you park your car during the day and night also has an impact on your premium. If your car is parked securely behind locked gates, an access controlled area, or in a locked garage, you will likely get a lower premium compared to just parking it on the street.
Type of Vehicle
The type of car you drive is one of the key points that insurance companies use to determine the price of your premium. The cost of car insurance for each vehicle can vary by hundreds for a driver owning multiple cars.
Undoubtedly, the more expensive the retail price is for a car, the pricier it will be to insure. This is because high-end models such as sports cars often use parts made from carbon fibre and other specialised materials that are expensive to repair, which drives up the cost of damage claims. Besides that, the insurance company will be on the hook to pay out the car’s market value should theft or robbery occur.
Your occupation is one of the factors car insurance companies will take into consideration when setting your premium. The price varies depending on travel regularity, and whether or not you use your vehicle to transport expensive equipment or stock.
Based on some statistics and research, it is proven that some careers are correlated with higher accident risk. Doctors, real estate brokers, and salespeople are some examples of occupations with higher premium rates. These careers usually involve high stress levels, overtime and lack of sleep which leads to higher chances of accidents occurring.
Other than that, these jobs require drivers to travel to and from client meetings and other appointments throughout the day. On the other hand, nurses and teachers are examples of professions with lower risk as these jobs are stereotypically considered as stable and requires a detail-oriented personality type. Therefore, these professions are associated with lower accident rates and hence may be charged at a lower premium.
Of course, not every driver who has a “high-risk” occupation is a high-risk driver and vice versa. For example, a high-risk professional who uses public transportation to get to work may have lower auto insurance rates as compared to his colleagues who drive to work.
Gender & Age
Insurance companies looked at national statistics and found that accidents often occur when the drivers at fault are males, and between the ages of 18 to 30. Hence, if you are a male driver who happens to fall in this age category, there is a high chance you will be paying a higher auto insurance premium compared to your female counterpart.
It should come as no surprise that teenagers and first-time-drivers will have the highest bill for their car insurance as these young drivers are deemed to be inexperienced, and therefore high-risk. Moreover, young men tend to drive more than ladies and they are more inclined to take risks while driving.
As we can see from the 5 points above, there are some non-modifiable factors such as gender and age that affects the rate of our car premiums. However, the ultimate factor that is within your control is your claim history. This can be curbed by driving responsibly on roads and hence reducing your risks of being involved in an accident. Also, it is good to do sufficient research on motor insurances provided by various insurance companies before making commitment to a policy.
Careful planning and proper understanding of available policies in the market will allow you purchase an insurance that is most suitable for you, and also save you plenty of cash for that trip that you’ve been dying to go for!
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