As per The Motor Vehicles Act, 1988, it is mandatory for every vehicle owner to have at least basic motor insurance in place. This necessitates the need for renewing your car insurance policy on time before it lapses each year. Now, while renewing your coverage, you might have noticed a change in the premium. This change might be reflected as a slight increase on the amount you have paid for the preceding year’s coverage. This might surprise you especially if you have not made any claims on your car insurance for the previous couple of years, or ever.
So, can your car insurance cost increase even in the absence of claims?
The answer is yes.
Your car insurance premium is determined by many other factors too. Let’s take a look at some major reasons why you might be paying more for your coverage even if you have not made any claims.
- Geographical location
It may surprise you to learn that the area where you reside can have an influence on the premium you pay for your motor insurance. For instance, if you neighbourhood has unfortunately seen a rise in incidents of car robberies, your premium might automatically increase when you renew your car insurance policy.
- Discontinuation of car models
Quite often, manufacturers decide to stop the production of a particular make and model of a vehicle. This decision can lead to that vehicle’s spare parts becoming harder to obtain over the years. In turn, it can indirectly lead to an increased risk of theft incidents for that particular car model. If you own such a vehicle that is no longer in active production, your car might be a risky insured product for the insurance company. This may lead to an increase in your premium.
- Changes in claim trends
While you drove safely and made no claims on your car insurance, other motorists might have been careless and needed to seek compensation. So, if your insurance provider has noticed an overall increase in the number of claims they have received, they might bump up premium costs for all their customers irrespective of who made a claim.
- Dip in credit scores
A few insurance companies do check your credit score before deciding on the premium you need to pay. A lower credit score might attract a higher premium. You can fortunately check around to find out which insurance companies do not give weightage to the credit score when calculating the cost of your premium.
These are some of the factors that influence the calculation of your car insurance premium. Do remember that these factors can vary between insurance providers. It is also important to note that the premium cost should never be the main deciding factor when you opt in for motor insurance. Make sure that you check customer reviews of the insurance company as well as their claim settlement ratio before taking your pick. We hope this article will prove helpful for you. Drive safe!