Can age determine car insurance rates?

Can age determine car insurance rates?

Your young and just got your driving license and got a new car that needs to be insured. It is mandatory in Saudi Arabia to get car insurance and it can be overwhelming with the different types of insurance and coverage’s available, especially when your first time driver and a insurance buyer. A lot of young drivers are not aware that insurance companies consider a drivers’ age as one of the biggest factors that effect the price of an insurance policy.

What should young drivers be aware of when buying car insurance?

Insurance companies usually ask for a drivers age before putting the driver into a age appropriate insurance category. The age category is then matched to the driver for insurance coverage for the car in the event of an accident or a natural disaster. Previously insurance companies in Saudi Arabia will only provide comprehensive insurance to drivers young drivers( 21 -25 years old). Recently the Central Bank of Saudi Arabia (SAMA) have updated there policy which now allow for insurance companies to give the option to insure cars owned by young drivers with third-party liability insurance (TPL). SAMA have also lowered the insurance coverage age to 18, provided that the applicant has a valid driver’s license. The change in policy has given the freedom of choice to young drivers on the type of insurance policy they feel suits them the most.

Why does age determine car insurance rates in Saudi?

Insurance rates are directly related to a drivers age, the reason behind this is:

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  1. Knowledge: Older drivers have experience on the roads of Saudi Arabia. Basically have done more hours driving on the road when compared to a young driver that just started driving.
  2. Insurance company records: Most insurance companies keep a record of all their customers details and claims which help in determining the renewal rates and percentage discounts, with new drivers no records are available.

Don’t be too concerned as a young driver with the high rates for an insurance policy, insurance companies in the kingdom of Saudi Arabia do provide discounts in the form of a No-Claims Discount(NCD), to policyholders who have not had any claims for a year or more, regardless of the age category. Drivers can get a discount percentage between 10% to 50% on there next car insurance rate. Young drivers can get a No-Claims-Discount on comprehensive insurance or third-party insurance if no claims on accidents have been claimed after a year of driving.

The main principle of getting an insurance policy is to protect yourself as a driver from any road side risks and, also to reduce the financial burden and legal liability of the driver towards the third party in the event of accidents. Young drivers need to research online and compare and review insurance policy’s online before committing to an insurance policy.