Motor Premium Calculation – Factors and Criteria
Written by Huma
Motor Premium calculation requires certain factors and criteria. Each factor analysis define the car-owner real premium.
The price paid for getting motor insurance is one of the major factors that influence the decision.
Traffic violation and driving mistakes had enforced the UAE government to make motor insurance as a mandatory condition for anyone who has any sort of auto vehicle.
One might wonder why their insurance premium is higher than their friends’, and it is a valid question.
Many people don’t know that their motor insurance premium is based on different determinants.
Some of these cannot be controlled, and some can be.
But on the other hand, some factors that contribute to your premium are those that you can easily get control of.
By keeping those factors under control you can keep the price of your policy from going up.
Motor Premium FAQ’s
What does premium mean in a vehicle?
It is just another word for the car insurance bill. It is basically the bill that you pay every month to keep the validity of your car insurance.
What are the different types of premium?
There are four different types of premium including lump sum, monthly, quarterly and semi-annually.
How much motorcycle license in Dubai?
The amount for the motorcycle varies in Dubai. The cost depends upon the amount you pay to the driving school you are registered with.
Below some factors are listed that affect the rate of your motor insurance:
Factors Impact On Motor Premium
1. Not so great driving record
If you have a history of being in accidents and receiving tickets because of traffic laws violations, you’ll most likely have to pay a higher premium.
A poor driving record depicts that you are an unsafe driver, and insurance companies consider it a liability to the company.
Motor insurance companies analyze the driver’s record and predict if the risk of the car being damaged is higher or not.
Therefore, if the driver does not have a stellar driving record, the chances of their insurance premium being high are greater.
2. Insurance companies consider demographics
Not many people know this, but the driver’s age, marital status, and gender affect their car insurance rate.
Insurance companies have formulas that they use to calculate the premium a person will pay based on their demographics and driving experience.
The insurers believe that if the driver is under 25 years old, single and has a less than a year old license.
Then the chances of them getting involved in an accident are much greater.
Thus based on demographics, insurance companies consider the historical statistical data of accidents and then factor that into the motor premium they charge.
3. Policy type that you opt for
If you don’t select your insurance policy carefully and don’t understand its terms and conditions, you might unnecessarily pay more for your motor insurance.
For instance, if you go for a plan with zero deductible, the premium will be higher.
Whereas, if you go for a policy with a 20 per cent deductible, the premium will be much lower.
You need to consider all your car insurance policy provisions and then try to eliminate the ones you probably don’t need.
Some of the provisions could be repetitive, or you might be getting the same benefits from somewhere else.
For example, if your car dealer is already covering you with a roadside assistance plan, then don’t add that to your car insurance policy.
Similarly, if you already have a personal accident insurance policy, then don’t pay twice for it and skip it from your motor insurance policy.
The add-ons you choose also impact your premium rates, so select them very wisely.
Hence, if you don’t travel across the borders of the UAE or don’t plan on going on an off-road tour, then don’t include such features.
4. Safety of the car
Historical data averages show that high-performance muscle cars are more likely to cause accidents.
This is why luxury and high-speed cars have more motor insurance premiums than standard cars.
Luxury and pricy cars cost a lot more when it comes to repairing or replacing parts as their spare parts are usually very expensive.
It will spike up the premium as the modifications may compromise the car’s safety.
Even if your motor insurance policy provides the coverage for the modifications, the premium rate will still go up as modified parts cost a lot more to insure.
5. Frequency of claims
One needs to keep the frequency of their claims in check.
- If you file for claims often then you will lose your no-claims bonus
- And you will also have to pay a greater premium upon renewal.
- It is better to pay for small damage repairs rather than filing a claim for it.
- It acts as a buffer or shield against big financial losses.
One might ask then, what is the purpose of having motor insurance if we have to pay for damages and repairs our self?
The answer is simple that your motor insurance act as a safety net in situations where the cost of damage repair is way too much.
Therefore, if you didn’t file any claims recently, then your next car insurance premium will be low.
6. Compare quotes before purchasing
Knowing your options and evaluating all the alternatives available is really important when it comes to purchasing motor insurance.
Skipping this step and just buy the first policy you came across then you can miss out a more suitable policy for our car.
- Getting multiple quotes from different insurance providers
- And then comparing them will help you in making an informed decision.
- Once you start comparing different quotes, you’ll realize that there is a significant difference in prices of plans
This analysis of alternatives may also help you to figure out that if you switch to another motor insurance.
Hence you could save a notable amount of money.
Conclusion:
To sum it up, don’t compare the premium that you are paying to that of your friends.
The insurance companies use different formulas to calculate their premiums, and different factors contribute to that calculation.
So, don’t be surprised if you hear that different companies are charging different premiums for the same type of plan.
Some of the factors that contribute to your premium are those that you can easily get control of.
By keeping those factors under control, you can keep the price of your policy from going up.
Making modifications to your car that do not compromise its safety, knowing the right add-ons, and skipping the redundant coverage services are factors you can easily manage, lowering your motor premium.
Related Articles:
A to Z Guide: Everything you need to know about driving a car in Dubai
Calculate Car Insurance Premium Online in the UAE – BuyAnyInsurance
Understanding Your Car Insurance Deductibles
Contact Us:
Originally published Nov 11, 2020 13:04:00 PM, updated Jun 05, 2024
