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Why is my car insurance going up?

A car insurance premium is the result of a calculation between several factors: age of the driver, years of driving licence, postcode, car characteristics (make, model, version, year of launch, power, cylinder capacity), bonus, etc.

 

Car insurance does not guarantee that this amount will be maintained forever. There are many situations that can cause the premium to vary when the policy is renewed.

 

Below, we list the most common reasons why your car insurance premium may increase.

  • Age of the vehicle: the older the vehicle, the higher the premium to be paid.
  • Type of vehicle: Insurance companies make periodic statistics on the makes and models of cars that have had the most accidents. Based on this, an increase in the base premium is set for that model of car.
  • Geographical area: the postal code indicated for the regular circulation of the vehicle can considerably affect the price of the insurance. Using statistics, insurance companies study which areas have a higher risk of accidents, theft, vandalism, etc.
  • Supplements: if you make changes to your policy during the year, this can affect the amount of your premiums.
  • Use of roadside assistance: in some insurance companies, the use of tow trucks or roadside assistance services usually generate an increase in the premium when renewing the policy.
  • Claims: this is a very important reason for the increase in premiums at policy renewal.
  • Bonus: this is a topic that brings many misunderstandings when it comes to premium increases. In this article, we will try to give you a clear explanation.
  • When we take out a car insurance policy, one of the factors in the calculation is the bonus, which is a percentage that is deducted (or topped up) from the base premium.
  • If you have never had car insurance in your name, you will have to start with a very low bonus, i.e. the discount applied will not be very high, resulting in a fairly high premium.

 

Example:

Base premium 1000€ / bonus 10% / resulting premium 900€.

  • If you have not had any claims or have not used the insurance, it is most likely that the bonus percentage will increase and the discount will be higher the following year, but this does not guarantee that the amount of the premium will go down, it will all depend on the base amount calculated.

 

  • When you have already had a car insurance policy for years and it is claim-free, you will most likely have the maximum applicable bonus, which in Spain is 60%. This means that, by having the maximum bonus (discount) at the next annual renewal, this cannot increase, but what does vary is the base premium of the insurance, which is why the amounts tend to increase.

 

Example:

  • 2020: base premium 1000€ / bonus 60% / resulting premium 400€.
  • 2021: base premium 1050€ / bonus 60% / resulting premium 420€.

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