Auto Insurance Premium Calculation
Welcome to auto insurance premium calculation. On this page you will discover how insurance companies calculate your monthly auto insurance premium. Included are the factors used in determining the monthly premium and some tips on how you can lower your premium.
Auto Insurance Premium Calculation
Have you ever examined your auto insurance policy? If you are like most people, you probably have not. You just pay the monthly premium and think nothing about it. Do you know how your auto insurance premium calculation is done? Most policy holders do not. All you want is for the insurance company to take care of you when you are involved in an accident. This article will provide you with information on how insurance companies calculate the monthly premium for your automobile and the factors they use.
Factors Used in Determining Your Auto Insurance Premium
Here are some factors that are used in determining your auto premium:
Most states require that you purchase a minimum liability coverage level, which covers damages that you cause to other vehicles and the people in them. You can select comprehensive coverage which covers damage to your vehicle and the passengers.
Premiums are based on the type of car you drive, including the model, make, year, and color if you have comprehensive coverage. Choosing a higher deductible may lower your premium.
Your personal credit history is also checked in determining your premium. Insurance companies secure your motor vehicle and clue reports to determine your monthly premium and if you will be offered any discounts.
Age. Statistically, drivers under the age of 25 are at a greater risk of being in an accident than those above 25.
Marital Status. A married person will pay less than a single person with an identical driving record.
Geography. Where you live makes a difference in the premium you pay. If you live in a neighborhood with lots of thefts and crime, you can expect to pay more for your premium.
Miles driven. Another part that makes up your premium is the number of miles you drive annually.
Years of driving experience and theft protection devices often results in discounts being offered.
Driving distance to work. The shorter the distance, the lower the premium.
Occupation. The type of work you do is also used in determining the premium.
Education. A higher education can save you on the premium.
Why Are Premiums Higher For Men?
Insurance companies use a variety of statistics to determine policy premiums. Here are some of the statistics they use:
Claims. Male drivers tend to be more severe and more likely to occur according to a study in 2007 by the National Highway Traffic Safety Administration (NHTSA). The study showed that male drivers were involved in twice as many accidents with fatal injuries than females.
Violations. Men are likely to receive 50 percent more citations more moving, speeding and reckless driving. Men are four times more likely than females driving under the influence of alcohol.
Aggression. Men are more prone to aggressive and reckless actions while driving than females.
Usage and annual miles. Men drive 60 to 65 percent more than women do and take longer trips.
Premium differences. Gender does impact car insurance premiums. The difference can be as much as 5% depending upon the company providing the policy.
What Can I Do Now To Lower My Premium?
Here are some suggestions on what you can do to lower your premium:
Shop around for quotes from different companies. You can do this by going online. Go here for a free no obligation auto insurance quote.
Some companies may see your area as a higher risk than other insurance companies do. Price comparison may help lower your premium.
Purchase your general insurance needs from one company. This will include a house or renters and life insurance policies. The more policies you have with one company, the lower your premiums because most companies will give a discount for multiple policies.
Improving your driving record and staying out of accidents will also lower your premium.
If you think you are paying too much for your automobile insurance, go online and check out what others charge for the same coverage. There is no fee for getting online quotes. If you save money, then by all means, switch to the new company. Remember, insurance companies will not inform you on how to lower your premium. You must do your homework. If you are diligent, you can save money on your automobile insurance premium.
The insurance companies base their rates on the sector of those they cover or group. As a sector changes those in that sector or group may experience an increase of their premium over others in a different sector or group.
Hopefully, this information was helpful to you. Knowing how insurance companies charge for automobile premiums should give you the reasons why it is being done. On the other hand, you must take action now to lower your monthly auto premium.
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