How does the car insurance premium work?

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The total cost of an auto insurance contract is determined by many criteria, and the applicable rate may also change each year. What are the different rules for calculating and paying the car insurance premium? Discover below the essentials to remember with

What is the auto insurance premium?

Auto insurance  ”premium” is  simply the term used to refer to the amount to be paid by the insured. It is therefore the sum to be paid in order to benefit concretely from the guarantees provided for in the contract if the risk ever materializes.

As part of a classic and long-term contract, the insurance premium is annual . Once the premium has been paid, the contract effectively protects the insured until the next due date.

In practice, an auto insurance premium is made up of four distinct compartments:

The actual risk coverage is the part of the premium dedicated to the possible compensation of the insured in the event of a claim. If the latter has a riskier profile (young driver, history of previous responsible accidents, etc.), this risk will logically lead to a higher price.

Auto insurance costs cover the fixed expenses incurred by the insurer to manage the contract. This includes, for example, the salary of insurance agents, rent and maintenance of the premises…

Taxes are included in the insurance premium for all drivers . They are collected by the insurer and transferred to the State.

The profit finally corresponds to the remuneration of the insurer: it is the gross margin realized on the contract. The latter can of course be higher or lower depending on the pricing policy of the insurance company and the state of competition.

Premium and insurance contribution: what is the difference?

The insurance premium always designates the total amount to be paid each year for the validity of your contract. The contribution can designate a shorter term, such as a monthly payment or a quarterly payment. For example, an annual insurance premium of €1,200 may be subject to four contributions of €300 each (source:

What are the criteria for calculating the car insurance premium?

Each insurer is free to set the amount of the insurance premium offered to its policyholders, depending on its costs, its risk assessment and its pricing policy. Policyholders, meanwhile, can of course take out the car insurance policy of their choice: a quick visit to an online simulator makes it easy to select the formulas offering the most advantageous rates.

Criteria linked to the profile of the insured : age and driving experience, date of obtaining a driving licence, history of the insured, number of responsible claims, bonus-malus coefficient , etc.

Criteria related to the insured vehicle : make and model, date of first entry into service, fiscal power, estimated value, type of engine, etc.

The criteria linked to the insurance contract : number and nature of the guarantees taken out, exclusions or extensions of guarantee, amount of the car deductible, etc.

The criteria linked to the insurer : amount of the reference premium, amount of management fees, gross margin, etc.

Calculating an auto insurance premium is therefore complex and specific to the file of each insured. Using an online car insurance comparator will give you a quick and reliable first overview of the price offered by dozens of insurers based on your profile.

What are the conditions for revaluation of the car insurance premium?

An auto insurance contract can provide for two methods of increasing the amount of the premium:

A “  revision clause  ”, or “contribution adjustment clause”, is generally inserted into the contract. It gives the insurer the possibility of increasing your premium during the term. The insured remains free to oppose this revaluation and must then make known his refusal and his request for termination free of charge within 15 days to 1 month (source: .

An “  indexation clause  ” can also be provided for the annual revaluation of the contract, in order to take account of the rate of inflation. Indexation is based on the monitoring of an index, and leads to an automatic reassessment of your premium on each annual expiry notice.

Car insurance premium: the consequences of non-payment

If payment is not made within 10 days of the deadline, the insurer sends the insured a registered letter of formal notice. He can then proceed with the suspension of the guarantees at the end of 30 days after the sending of this letter. After 10 additional days, he will finally be entitled to terminate your contract definitively (source: .

What is the average car insurance premium?

The most expensive regions to take out car insurance are Île-de-France and Provence-Alpes-Côte d’Azur, with €697 and €677 respectively. The cheapest region is Brittany with 537 €.

The amount of a car insurance premium can vary considerably from one insurer to another, for the same vehicle and the same level of guarantee. It is never superfluous to launch a search on an online car insurance comparator: you will thus benefit from an automatic selection of attractive contracts among many insurers.

The payment of the car insurance premium makes it possible to finance the coverage of the risk represented by the insured;

Its amount depends in particular on the quality of the guarantees , the value of the vehicle and the profile of the driver;

Car insurance premium too high? Terminate your current contract any time after its first anniversary.

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