Monetary Value
In short-term insurance, including car insurance, you can only insure a risk that can be calculated in monetary value. It is one of the basic principles of short-term insurance that the value of something must be measured in monetary terms. For example, your loved ones are very precious to you but you cannot attach a monetary value to their lives – herein lies one of the major differences between short-term and life insurance.
The specific monetary value of your car will play a large part in the calculation of your insurance premium – it is obvious that the bigger the monetary value of your car the bigger the monthly insurance premium will be. You cannot decide independently what the monetary value of your car should be; the insurance companies have guidelines such as the car dealer’s guide which they use to calculate the monetary value of your car for insurance purposes.
The value of your car is also not the only factor that will determine your car insurance premium. A number of other factors are taken into account such as your personal profile which includes your age, gender, job, the area where you live, if your car is mainly used for business or private travel and various security measures such as where you park your car at night and what anti-theft devices you have installed.