How is the price of auto insurance calculated?

Any vehicle put into circulation must be insured with an operator of its choice. The price is often a determining factor when taking out a car contract and differences can be observed from one insurer to another. How is the price of car insurance determined?

Various  elements are taken into account to calculate its car price , according to four main axes.

The benefits of the auto insurance contract

A motorist who wishes to insure his car must choose between several types of services. To best meet their needs, they can also take out optional guarantees for their auto insurance. The price varies according to the services chosen and the degree of compensation.

Comprehensive insurance vs. third party insurance

In auto insurance, two main types of contract co-exist : comprehensive  insurance and third-party insurance.

Being insured at  all risks  allows you to obtain  compensation for any damage that may occur to the vehicle , whether resulting from a responsible accident  or not , or whether it is damage. Glass breakage, fire, theft, etc. are risks covered by comprehensive insurance. Such insurance also makes it possible to  cover material and immaterial damage caused to a third party.

Being insured by a third party compensates a third party who has suffered damage as a  result of the insured's vehicle. However, this insurance excludes everything that is the responsibility of the driver towards his own vehicle. For the insured party, the intervention of a responsible third party in the occurrence of the damage is essential in order to claim compensation.

An  intermediate formula , which is  reinforced third-party insurance , however, makes it possible to enrich the services.

The price of an all-risk auto contract is higher than the cost of third-party car insurance, the scope of services being much wider for the first than for the second.

Each operator defines the compensation levels offered for each of its guarantees.

Optional guarantees

If the different auto contracts of the same type have a common base with basic guarantees, insurers often offer the  subscription of options  to personalize your car insurance contract. For example, some offer  assistance guarantees , 0 km breakdown assistance ,  replacement or replacement value of the vehicle,  compensation for personal property left inside the vehicle, etc.

The rates for optional guarantees are added to the price of basic car insurance, which is why, to see more clearly and simulate the rates, using a comparator seems essential.

Car insurance rates: the impact of the car model

The price of an auto insurance is also determined according to the model of the car to be insured. The make, the engine power, the model are characteristics of the vehicle which influence the premium of the auto insurance.

In particular, statistics are drawn up which identify the most stolen vehicles, the most damaged, etc. These show the highest auto insurance contributions.

The type of engine chosen for his car is not neutral . Some insurers grant promotions to vehicles that limit their ecological impact.

We all know that  auto insurance represents a significant budget for motorists and this will be even more important depending on the model of car we own .

Indeed, for example, for a  car of the Honda brand  and more precisely the CRV model, the flagship of the brand, it takes 621 € / year for auto insurance according to * data. For a rarer model like the S2000, auto insurance represents € 1,074 / year on average.

The more expensive your car is to repair, the higher the cost will be. Insurance companies study the models and make before determining the price of  your Honda auto insurance .

Auto contract: prices for each profile

The car itself is not the only component of the price to be paid to obtain a green insurance card. Administrative and civil information relating to the insured is also taken into consideration . Explanations.

The profile of the insured

An insurer will collect a certain amount of personal information when drawing up the auto quote. These are not only used to revive the applicant or for administrative formalities. Age, family situation, place of residence, sex are data used to compile statistics . They give a profile to the insured, which determines his degree of risk vis-à-vis a possible auto claim. This probability reflects on the proposed pricing.

For example, a young driver's car insurance is often increased by an additional premium. This is because the probability of claiming compensation for an accident is considered by the insurer to be higher than for an experienced driver who has not suffered a loss in the past. Conversely, a senior who drives little is likely to pay less for his car insurance.

The bonus - penalty

Being a good or bad driver also has an impact  on the wallet. A bonus-malus is granted to policyholders, depending on their accident rate in previous years.

In the absence of accidents occurring during the year, the insured benefits from a bonus, which will lower the price of his car insurance. Conversely, the more responsible accidents recorded, the greater the penalty. An increase in the price is then probable.

Some insurers keep the bonus rate at its maximum once it is reached.

The use of the car

When taking out the auto contract, the insurer will also take an interest in  the use of the vehicle . In particular, it should be specified whether the insured car will be used for private journeys and / or home-work journeys and / or professional journeys.

The declared annual mileage is also taken into account. Insurance contracts per kilometer are offered by some organizations.

Vehicle loan or not

The vehicle is attached to a main driver. A secondary driver can also be declared in the contract. The profile and history of this second driver (accidentology, bonus-malus, license date, etc.) will also be studied when pricing the car contract.

The insurance can be extended to other drivers through the vehicle loan guarantee. This has a cost which increases the insurance premium.

New insured or loyal customer

The length of time the policy is purchased can affect the cost of insurance for a car. It is because the sector is very competitive.

Also, operators are deploying aggressive commercial offers to attract new policyholders, in particular with months of contributions offered.

To retain their policyholders, some also deploy marketing arguments, such as the lifetime bonus, a lower premium for the second vehicle, etc.

Prices and services at the discretion of insurers

The owner of a vehicle can freely choose the insurer with which he wishes to take out his car contract. Each operator freely sets its prices and significant price differences are sometimes observed for equal services .

It is therefore interesting to request quotes and  compare the different auto contracts offered .

Note that automobile insurance can be taken out with various operators: insurers, mutual groups, bancassurances.

The criteria that define the premium for an auto insurance contract are many and varied. For the same car and with equivalent guarantees, the price can be very different from one insured to another, and from one insurer to another. It is therefore recommended to compare several insurance proposals to find your auto contract at the best price.

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