Calculations of Car Insurance
The topic of car insurance is often a serious point of discussion. When you hear what some of your friends pay you wonder how the insurance companies calculate their premiums. It does not always seem to be related to the value of the car, so how do they do their maths?

There are a number of factors influencing the calculation of a car insurance premium, let’s look at them in more detail:

The Car Itself:
Certain characteristics of the car you buy will have a big impact on your insurance premium:

1.The make: If your heart is set on that Italian number you are going to pay more. The reason is that the car will be more expensive to repair as dealers do not keep spare parts and will have to import them when needed. So even if an imported car has the same value as a locally manufactured vehicle, the insurance will cost you about 50% more on the imported car.
2.The model: A sports car will cost you more to insure as the risk has been proven to be higher—not just of being involved in accidents but also of being stolen.
3.The Value: If you are going to insure your car for retail value instead of market value, the premium will be higher.
4.Company support chain: Some companies have a large support chain network and if you buy a car which falls in this category your insurance will be lower. The reason is that there will be a good coverage of service centres carrying a large inventory of spare parts; there are also enough trained technicians available.
5.High Profile/Performance Cars: The likelihood is greater that these cars may be involved in more serious accidents. Buying a low profile car will place you in a lower risk category.

Other Factors:
1.Theft: Statistics show that car theft syndicates prefer certain cars. If you buy one of their favourites your premiums will be higher due to the higher likelihood of the car being stolen or hijacked.
2.Security Systems: If your car has great (and insurance approved) security systems such as a VESA rated immobilizer or a tracking and recovery system, you will receive a deduction on your premium.
3.Where you live: Insurance companies have rated all areas in terms of risk. If you live in a high risk area—where the company has experienced a high volume in claims—you can be paying a lot more. Living in a high security complex or security estate will have the opposite effect.
4.Where you keep your car overnight: Keeping your car in a locked garage will reduce your premium.
5.The driver: The driver’s age, gender and circumstances all affect the premium. Young drivers under 25 years of age are seen as a high risk. Women often qualify for cheaper insurance as they are a lower risk. Your driving record will obviously also influence the premium.
6.Business or pleasure: Using your car for business purposes increase the premiums, the insurance company will also look at what type of business it is used for. Driving to work and back is classed as private use.
7.The Excess: If you opt to pay a higher excess on claims you can save up to 40% on the premium depending on the excess structure you choose. Consider all your options carefully, don’t shoot yourself in the foot.
8.Designated Drivers: The more people you nominate as drivers, the more you will pay on your car insurance as fewer drivers equals lower risk.

The best advice will be for you to consider all these factors BEFORE buying a car, you may change your mind completely and fall out of love with your dream car once you realize its risk potential and the resulting insurance premiums you will have to pay.