It is a great question and a valid one. We often look at our high premiums and wonder whether these were calculated, or did the insurance company whip them out of thin air to maintain a profit margin? But the truth is car insurance premiums in Dubai, Abu Dhabi, and all over the UAE are minutely calculated, keeping three significant factors in mind:

• Your vehicle

Since your vehicle is the main asset insured through the policy, it depends on it when calculating the premium. If your vehicle is second-hand, an old model, or an inexpensive family car, you can expect a different premium to newer luxury models. However, this is not guesswork on the company's part. Insurance providers determine the value of your car by running an evaluation and getting the car tested by professional assessors. Factors like where your vehicle was registered play a part in calculating its premium.

• You  

A lot of your premium also depends on you. Your age, experience, where you live, and country of origin; all play a part in determining your car insurance premium. Drivers under 25 and over 60 are charged a higher premium due to lack of driving experience and the rigors of age. More than one driver on a single policy also changes the dynamics of the premium you pay.

• The coverage you choose

The third factor that affects your car insurance premium is how much coverage you choose. Opt for inexpensive third-party liability insurance. Your premium will be lower, but if you get comprehensive coverage and add-ons, the premium rate will increase. How much you're willing to pay for your insurance is determined by how much coverage you want.