Auto Insurance Comparison: Factors Affecting Auto Insurance Premiums

List four Factors that can Change your Insurance Premium

Auto Insurance Comparison: Like other insurance, the premiums for auto insurance are affected by many factors, such as the owner's driving experience, the brand of the car, the purpose of the car, and claims history. 

There are different insurance policies on the market that provide various types of protection for car owners. You can also add additional protection in different areas according to your actual needs. But comparing car insurance door-to-door online can take a lot of time. If you are worried about your car insurance, the following tips may be able to help you.

Auto Insurance Comparison: Factors Affecting Auto Insurance Premiums
Factors Affecting Auto Insurance Premiums

Learn about the types of car insurance

When you're comparing auto insurance, the first thing to know is what type of insurance plan you need. Auto insurance can be divided into third-party liability insurance and comprehensive auto insurance.


Third-party liability insurance (three guarantees)

In Hong Kong, third-party liability insurance is a minimum requirement by law. It is against the law for any driver to drive a vehicle without purchasing third-party insurance or having equivalent coverage.

Third-party liability insurance, referred to as three guarantees, as the name suggests, only covers personal injury or property damage to third parties other than the owner or policyholder. Suppose you buy this kind of insurance and your car accidentally hits the wall, you need to pay for all the car repair costs yourself, but the three guarantees will compensate for the repair costs of the wall.

Comprehensive Auto Insurance (Full Coverage)

Comprehensive car insurance covers the most extensive coverage. Car owners can claim compensation from the insurance company for damages to the vehicle, personal injury, third-party personal injury, and property damage.


Options other than three guarantees and full guarantees

If you feel that the full insurance is too expensive, and you feel that the three guarantees are insufficient, you can consider purchasing the following two types of insurance:

Third-party fire and theft insurance: Third-party fire and theft insurance can provide extra coverage for your car, which means that if your car catches fire or is stolen, "You have the option of filing a claim with your insurance provider.

Upgraded three guarantees: Some three guarantees allow car owners to purchase additional protection, such as the " Windshield Protection Plan". If the windshield of the insured car is damaged due to an accident, it can be replaced at a designated repair center for free (the maximum compensation amount is $3,000.00), without paying any "deductibles", and without affecting the valuable NCD no-claim discount. Other three-guarantee extras include personal accident coverage and 24-hour emergency towing service. 

Car insurance cost is influenced by a number of factors

When a car owner applies for car insurance, the car insurance company will determine the premium based on the following factors:


1. Owner's driving experience (license age)

The age and driving experience of the car owner can be said to be the most direct condition among many factors. Often insurance companies will deny auto insurance coverage to drivers under the age of 25 or to owners of vehicles less than two years old. This is because young drivers have less driving experience and are more prone to traffic accidents. As a result, even if these drivers eventually find an insurer willing to cover them, their premiums will be higher, and the policies often come with a deductible.

As for past claims records and traffic violation records, of course, the premiums will be affected.

2. NCD (No Claim Discount)

The no-claim discount is a feature of auto insurance, where the insurance company gives the policyholder a percentage discount on premiums when the policyholder has not claimed a claim within a specified period in the past.

The NCDs provided by general insurance companies in Hong Kong for private car insurance are as follows (for reference only, the NCD policies of each insurance company may be different):

Drive No Claims for the First Year: 20% No Claims Discount

2nd year of driving without any claims: 30% no claims discount

3rd Year Driving No Claims: 40% No Claims Discount

4th year of driving without any claims: 50% no claims discount

5th year of driving without any claims: 60% no claims discount (highest accruable level)


3. Vehicle age

The age of the car has a big impact on insurance premiums. Generally speaking, when purchasing insurance for vehicles over 10 years old, the insurance company will levy a surcharge in addition to the premium. Because older vehicles are generally less reliable, the risks involved are higher.


4. Vehicle brand, market value, and performance

In terms of brands, the parts of some car brands are more expensive and even need to be shipped from overseas, so it has a greater impact on the full insurance premium.

As for market value, if you have comprehensive coverage, the value of the car at the time of the policy will have a direct impact on the coverage. The higher the cost of an automobile, the higher the cost of insurance. Premiums for high-end sports cars must be much more expensive than low-end mobility vehicles. The new model is also a bit more expensive than the old model. High-priced cars also have higher risks to insurance companies because they involve higher compensation amounts.

Car performance has a more obvious impact on the "three guarantees" premiums. The higher the engine horsepower and the faster the speed, the higher the premiums will be, especially for motorcycles and sheep. This is because engine horsepower has a direct impact on the performance and performance of a vehicle, and a high-horsepower vehicle has a higher chance of speeding and a higher risk of a collision.


5. Vehicle use

When you buy car insurance, the insurance company will ask you to declare the primary purpose of the vehicle. If you just go to work and go to get off work, it usually doesn't affect your premiums. However, if your vehicle is not used for personal use (for example, for business purposes, to help you visit customers non-stop, negotiate business), because of the higher risks involved, you will also need to pay higher premiums.


6. Occupation of the driver

The occupation of the driver responsible for driving the insured vehicle will also affect the premium. If the driver of the insured vehicle is a professional racing driver, the accident risk involved is much higher than that of the average white-collar person. In addition, people in the construction industry generally drive in and out of the construction site, so the risk of accidents or vehicle damage is naturally higher.


How to Compare Car Insurance?

1. Car Insurance Price

you get what you pay for. Insurance plans purchased with a limited budget also provide relatively limited coverage. Generally speaking, the premium of third-party insurance is much cheaper than comprehensive car insurance. However, the property damaged by the accident is not included in the coverage of the third insurance, and the personal loss may be considerable. Inexpensive insurance premiums can lead to bigger costs after an accident, especially if you may have to pay for your car repairs out of pocket.


2. Additional protection

There are different types of car insurance plans on the market. Some are more likely to provide you with convenient services, such as roadside assistance or windshield replacement. Others may include personal accident insurance and medical services. It is advisable to consider whether you really need these additional features and benefits before applying for insurance, otherwise, you may just be adding unnecessary premiums.


3. Deductible (commonly known as a bottom-up fee)

When comparing auto insurance, you generally have the right to choose a plan with a higher deductible, with the advantage that the premiums will be much cheaper. However, are you prepared that in the event of an accident, you will have to pay for a large repair bill yourself?


4. Shop around

Technology is advancing by leaps and bounds, and it is easier than ever to compare car insurance online. You can try to obtain quotes through different channels, and compare the details of the coverage and exclusions, so as to choose the most suitable and cheap car insurance plan. Gathering information may be time-consuming, but the savings in premiums, in the long run, are well worth the time.


What's the best way to compare car insurance?

Kuaibao is an experienced auto insurance broker who can benefit from long-term partnerships with insurance companies. Our professional consultants will compare a variety of auto insurance plans and provide you with the most competitive price plan according to your driving needs. Get a free car insurance quote through our online quote system now!


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