How Car Insurance Premiums Are Calculated
Car insurance companies take many factors in account when calculating your car insurance premium, some of the main factors are detailed here:
- Age - Younger drivers are statistically a higher insurance risk and therefore receive more expensive quotes.
- Gender - Females currently get cheaper car insurance than men, however this is all about to change. Click Here to find out why.
- Car Insurance Group - The higher the insurance group the the more it costs (groups range from 1 to 50).
- Level of Cover Required - Generally Fully Comprehensive Insurance is more expensive than Third Party Insurance.
- Excess - Increasing your excess can reduce your premium, Click Here for more details.
- Occupation - Most jobs have little effect on an insurance premium, however insurers consider some jobs a higher risk (e.g. journalists, sportsmen, students, landlords etc.) and will increase premiums accordingly.
- Where the Vehicle is Kept - It will usually cost less to keep a vehicle in a garage overnight than it will to keep it on the street.
- Annual Mileage - High mileage insurance policies carry an increased cost as you are more likely to be involved in an accident.
- No Claims Bonus - A Maximum No Claims Bonus (usually 9 years) can mean discounts as high as 70%.
- Endorsements and Penalty Points - Penalty points often result in higher car insurance premiums.
- Existing Claims - Claims in the last 5 years can push up car insurance quotes.
Who Decides How Much Car Insurance Premiums Cost?
Insurance costs are set by insurance underwriters. These underwriters develop pricing algorithms based on historical data to allow them to accurately balance risk with cost. In effect this means your car insurance premium is based on how other people with similar criteria have performed in the past.
How Are Car Insurance Premiums Calculated In The US
CarInsuranceExplained.com is based on knowledge of the UK car insurance industry. For more information regarding how car insurance premiums are calculated in the US please visit here.
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