There is a widespread misconception that insurers decide the insurance premium without using any standards or rules. That is not the case, though. Insurance companies take great care while determining the customer’s premium. It entails doing a lot of background study, checking over financial statements, and attending plenty of meetings. As a result, just when you pay a larger premium than your friend does not always indicate that the insurer did so randomly. Instead, they must have discovered some information that convinced them to increase your premium.
This misinterpretation makes perfect sense. After all, the insurance company conceals the causes while determining the rate. Because of this, the majority of clients think the procedure is pointless and pointless. It’s also noteworthy to observe that car owners themselves are unaware of their influence on the premium. You might be shocked to learn that the premium is also decided by the car owners, as are our readers and customers. Let’s look at how this is accomplished.
1. HOW FAR YOU DRIVE
The majority of automobile owners are unaware of this fact, yet how much you drive affects your premium. The representative might jokingly inquire at meetings what the car is used for. If occasional driving is the response, the insurance premium can be less. On the other hand, the premium would be higher if you responded that the vehicle is utilised for everyday transportation. The car will be on the road more as a result, increasing the possibility of something going wrong. In the UAE and throughout the world, several auto insurance companies have gone digital. It implies that online insurance coverage is simple to obtain for car owners. Therefore, if you choose internet insurance, you might not be questioned in this manner.
2. AREA OF RESIDENCE
There are a number of reasons why auto insurance companies request residence information. To calculate the premium is one explanation. You might be shocked to learn that a lot of insurance companies in the UAE save information on claims broken down by residential area. They would be aware of the number of accidents in Area A, the amount of car thefts in Area B, and so forth. When figuring out the premium, they use this information. Therefore, the premium would be greater if you reside in a location with a high frequency of claims.
3. VEHICLE TYPE
Insurance companies also maintain model-specific data. Consequently, your vehicle’s kind affects the premium as well. For example, certain cars are safer than others. They have safety features built right in to make driving with them safe. For instance, a lot of contemporary cars have collision warning systems. The brakes are automatically engaged as soon as they anticipate a collision. Another component that prevents drifting is steering control. All of these characteristics lessen the likelihood of accidents. Consequently, you can receive a lesser premium. Similar to how vehicle thieves favour specific automobile models. Unfortunately, if you own that mode, the premium will increase.
4. PREVIOUS CLAIMS
The company could request references from prior employers when you apply for a new job. To learn more about your job ethics and skills, this is done. It comes fairly naturally to do it. After all, your company is required to pay you. As a result, they must make sure they are recruiting the proper person. Similar to this, insurance companies inquire about previous claims made by car owners. A driver is considered to be safe if they have no or few claims. This is considered by the insurance company, which offers a reduced premium. On the other side, you might anticipate a higher premium if your driving history is littered with claims. You would be viewed as a risk by the insurance provider, and they would compensate by charging you more.
5. PREVIOUS DRIVING CONVICTIONS
A driver who has a history of traffic violations will pay a higher premium. Those with a clean driving record are less likely to make insurance claims than those with convictions for driving.
6. CREDIT HISTORY
When compared to drivers with a bad credit history, those with strong credit scores can earn lower premiums. Not all nations permit insurance companies to request credit history.
7. GENDER, AGE, MARITAL STATUS, PROFESSION
According to equality laws, which prohibit gender-based discrimination, basing a premium on a person’s gender is illegal. Insurance companies have, however, discovered ways to get around it. In a similar vein, age affects how much you pay for insurance. Because they are viewed as being more aggressive, young drivers are charged more. Similar to this, the evidence available indicates that married drivers experience fewer claims than unmarried drivers. As a result, married drivers would pay less in insurance. Due to their higher risks, certain specialists face higher premiums.
8. NUMBER OF PEOPLE DRIVING THE VEHICLE
In the UAE and many other nations, auto insurance is purchased for the vehicle rather than the owner. Therefore, in addition to the information listed in Point 7, insurance providers often ask how many persons will be operating the vehicle. The rate would be high if there were a lot of drivers. Additionally, if they are all single, it would increase even more.