Will Your Driving Habits Affect Car Insurance Premiums?
If you haven’t already heard, the motor insurance industry is going through a big change, it is being detariffed. What this means is that the government (Bank Negara Malaysia) is no longer regulating the way insurance companies charge for their premiums. When premiums were tariffed, the main factors considered in pricing were the car’s engine capacity and age along with its sum insured and optional add-ons like windscreen and flood covers. However, as premiums are detariffed, you will now be charged based on your individual risk profile – which basically calculates the accident and theft risks you pose as a driver.
So Will Your Driving Habits Have An Effect on Your Premiums?
The short answer is yes. As mentioned, a risk profile will now determine your rates. Thus, the more risky you appear, the higher your premiums. This means that if you and your neighbour drove the same car and chose to insure it for the same value; you might still end up paying a different premium nevertheless.
In calculating your premiums, you will be ‘judged’ on a number of factors – which include the way you drive, in addition to other considerations. Let’s take a look at the potential factors in a risk profile:
Even though we believe that age is nothing but a number (or a word according to some), younger drivers are perceived to be less experienced and as such, a higher premium is expected to apply. So while you may be an old soul, the number that actually counts when it comes to these new premiums is the one on your birth certificate.
Yes, your gender matters apparently. Based on studies, females are said to be better drivers on average than males. Still, it’s a tricky subject to circle since nobody wants to be singled out to pay more. However, since gender isn’t the only factor in a risk profile, young males will hopefully still be subject to a fair premium when all is considered.
Claims and Driving History
It’s unclear how your claims history might affect the premium if no fault can be determined, but it certainly is an area of interest for insurance companies. This is because they are looking at the likelihood of a driver to make a claim in the future. Thus, if you have frequently claimed for accidents or lost vehicles in the past, this could be reflected in your risk profile and affect your premiums.
Years Of Experience
Drivers with years of experience under their belt might be subject to a lower premium whereas new drivers could pay a higher premium. This makes sense because new drivers are still learning and prone to making mistakes on the road. One the other hand, those with experience should (hopefully) have the skill to avoid dangerous situations and accidents.
When looking at the likelihood of an accident or a car getting stolen, it’s important to note how the car will be used. For instance, will the driver be on the road during peak accident hours? If yes, then he or she might be subject to a higher premium. Conversely, if a driver uses the car infrequently and travels to nearby, low-theft locations during low-peak hours, then lower premiums could apply.
Car Model and Type
Some cars are more attractive to thieves (based on theft rates), namely high-end luxury models and as such could incur a higher premium. Also sport utility vehicles (SUVs) and high-performance cars are said to lack safety and might incur a higher premium as well. However, a report from the Insurance Institute for Highway Safety in the United States in 2015 actually lists SUVs to be safer when equipped with stability controls.
If you are into anti-theft systems, collision aversion controls and other amazing tech that can minimise potential theft or accidents, good on you! These safety measures might not only save your life, it could also save you money on premiums. Do bear in mind, that your premium will be based on the sum of these factors, not just one or two. Although, it’s possible that some of these factors might carry a higher weight than others at the discretion of the insurance companies who are also free to use any number of factors to determine a risk profile. Some are even including drivers’ occupation in the list, citing that those with a higher education and professional occupation are less likely to get involved in accidents.
What You Can Do To Ensure the Lowest Premiums
One good thing about detariffication is that you are now in more control of your premiums than you were before. This means that your premiums could be lower lah! Here’s what you can do to give yourself the best chance of low premiums:
Improve Your Driving Habits
Captain Planet once said, “The Power is yours!” and he’s right. If you drive conscientiously, park your car in safe zones and be more responsible overall – the probability of your car being stolen or involved in an accident could significantly be reduced. With a history of good habits, your premiums can stay low. Of course, there will be times when these incidences are completely out of your control. That’s when you’ll be thankful to have a good car insurance plan on your side!
Take Care Of Your Vehicle
Ensure that your car is performing to the best of its ability to reduce the possibilities of accidents due to malfunctions or it breaking down on lonely highways, opening the opportunities for theft.
Do Not Wait Till the Last Minute!
When premiums were fixed, it was relatively easy to buy your insurance almost immediately at the last minute. But now, it might take a little longer to evaluate your profile, so do plan ahead!
If you were used to comparing prices before, then know that it’ll make even more sense to compare now. This is because there will be new deals, fresh plans and a potentially wider range of prices from insurance providers and Takaful operators. If you don’t compare, you will miss out on potentially better deals.
We can’t ‘bear’ to let you pay more in premiums. Consider all your options before you go with the car insurance policy that's right for you!