When calculating the insurance premium charges paid by individual companies, several factors are considered. These factors vary by jurisdiction and local area laws. The primary source of the basis for insurance premiums paid is based on several factors that have been calculated.
The first of these factors; and sometimes more crucial; is the age of the driver. The age of the driver has a direct relationship with the insurance rate that can be charged to the person. Statistics have shown that younger drivers tend to be careless and inexperienced. In effect, this makes them high-risk customers and their premiums are higher than the older group of drivers.
The vehicle being driven is also another crucial factor to consider. A very fast sports car with high specifications will usually cost more; unlike a small car which has a smaller engine. This is because the sports car has a higher chance of being in an accident, compared to a vehicle with smaller specifications.
In some cases, gender has been used as a factor in determining the rate of premiums paid; although it has received serious opposition from women. Statistics show that female drivers are involved in more accidents than their male counterparts; Thus, some companies charge women more, due to their greater risk of being involved in an accident.
If you happen to be married, in most cases you will have to pay a lower premium; unlike other individuals who are single. Statistics have shown that married people are less likely to be involved in accidents; and when they are included in the equation, this calculation places them as low-risk customers; therefore, they are required to pay much lower premiums.
Some insurance companies have embarked on testing insurance coverage that is based on the distance the vehicle travels. This is a product that is mainly marketed to people who use the vehicle little and do not travel much. The option to be insured for the distance they travel translates into lower premiums if they cover shorter distances; unlike drivers of vehicles that travel longer distances.
Credit history may also be a factor used in determining the insurance premiums paid. Under the system, drivers with high credit scores receive lower premiums because they are considered lower risk customers than people with low credit scores.