In Malaysia, car insurance is required for all vehicle owners. The No Claim Discount (NCD) helps many drivers save money on their first renewal. However, even with these savings, your insurance rate may increase due to a variety of reasons.
If you’ve ever wondered why this happens, here’s a detailed overview of the primary reasons your car insurance premiums may rise, as well as practical steps to keep them under control.
- Age and Driving Experience
Statistics show that younger drivers, especially those with little experience, are more likely to be in a crash. Insurance companies see this as a bigger risk, so they charge higher rates. Your insurance rates may go down as you get older and gain more driving experience.
- Driving Record
Your driving record is a significant factor in determining your car insurance premium. The insurance company will raise your rate if you are a high-risk driver with a history of traffic violations.
Since high-risk drivers are more likely to get into accidents, so they have to pay higher insurance premiums.
- Car Value
A car’s value directly affects the insurance rate because higher-value cars are more expensive for insurers to repair or replace. A higher market value also increases the risk of theft, thereby increasing the insurance premium.
As a result, the higher the value of your car, the higher your insurance premium is likely to be.
- Engine Capacity
Insurance rates are usually higher for cars with bigger engines because they can reach higher speeds and are more likely to be involved in crashes.
Along with that, bigger engines often cost more to fix or replace, which makes insurance rates go up even more.
- Location
Insurance rates may be higher in cities because the traffic density and accidents are higher compared to rural areas. Accidents are more likely to happen in cities, which can make insurance costs go up.
Besides, your insurance may be higher if you live in an area with a lot of crime, especially car theft. Insurance companies consider this factor, as those living in high-risk areas may likely submit bigger, more frequent damage claims. So, this affects how much premium they have to pay as well.
- Type of Coverage and Add-Ons
Comprehensive insurance, which covers both third-party liability and own damage, is generally more expensive than third-party only insurance. This is because it provides broader coverage, including damage to your own vehicle.
Your insurance rate may also go up if you choose to purchase optional add-ons like roadside assistance, personal accident insurance, or windscreen coverage.
- Insurer Policy
Insurance premiums may increase even if you haven’t made a claim, as the insurer might adjust premiums based on overall claims history within the group of policyholders or changes in the cost of providing coverage.
How to Lower Your Car Insurance Premium?
If you’re wondering how to get a lower car insurance rate, use these methods to reduce your premium:
Maintain a Clean Driving Record
- Avoid accidents and traffic violations to demonstrate responsible driving behavior. Safe driving not only keeps you safe but also keeps your insurance rates low.
Compare Rates
- Compare quotes from different insurance providers to find the best deal. Different insurers may offer different rates based on their risk assessment.
Ask About Discounts
- Some insurers offer discounts for safe driving such as NCD, low mileage, install anti-theft devices. These discounts can help you save on your premium.
Review Your Policy Regularly
- Your insurance coverage should adapt with your needs. If your car’s value drops or you no longer require comprehensive coverage for an older vehicle, you can adjust your coverage and save on premiums.
Get A Car That’s Cheaper To Insure
- The model of your car can significantly affect your insurance premium. When buying a new car, consider a model that is more affordable to insure to keep your overall costs down.
Conclusion
An increase in your car insurance premium doesn’t always mean you’re being overcharged. It’s usually the result of risk adjustments, market factors, or added coverage. By understanding what drives your premium and applying the cost-saving tips above, you can make smarter decisions and get better coverage at a fair price.