Helping Drivers Save Money Since 2011 

cheap car insurance for young drivers

 

 

How Are Car Insurance Premiums Calculated?

cheap car insurance for young drivers 

Having car insurance is a good way to protect you, other parties and your car. Each car policy is assessed individually by reviewing statistics, considering all the factors in calculating premiums. These factors include the car owner’s age, gender and driving record. Car insurance premiums are determined by a series of rating factors and when they are calculated, an underwriter can determine the kind of insurance policy that a certain individual needs.

Car insurance companies have what they call Underwriters. They are the people who assess the risks involved based on the factors that are present. These Underwriters are the one responsible for ensuring that the level of risk is profitable to the company. If the policy is too cheap, the amount that they may pay out in claims may outweigh the amount they have collected. If this happens, it will be the company’s loss. That is why Underwriters must evaluate correctly and give the best policy premium that is both beneficial to the car insurance company as well as the policy holder.

There are many factors that affect the amount of premiums you will be paying. Age, area, gender and driving history are the most important factors that Underwriters usually take into consideration. A driver’s age plays a big role in getting a lower premium rates. The younger the driver is, then most likely they are paying higher premiums. This is because drivers whose ages are below 25 years old are considered to be high risks for accidents. Gender is also another basis for lower premiums. Females are considered to be safe drivers compared to males since they are less aggressive behind the wheel. This is also the reason why they have cheaper car insurance premiums compared to the opposite sex. If you live in an area where crimes like vandalism, thefts and accidents can also contribute to the amount you will be paying your insurance company. These areas are considered high risks so you will expect a higher premium. Understand also that car owners who live within the inner cities are mostly candidates for higher premiums compared to those who live in the suburban or rural areas. The more populated the area is, the more high risks it is for the car owner. All of these play an important role in the assessment of a car insurance premium quote.

Lastly, car insurance companies calculate premiums by using the driver’s driving record or history. If the driver is more experienced and has been driving for many years then they are good for lower premiums. But if the driver is new or just recently learned how to drive then expect that they will have higher premium rates. Over all, it all goes down to the driver’s experiences. If you want to know what other factors contribute to your car insurance premiums then call your car insurance agent. By talking to your agent will help you understand how your premiums are calculated in a way car insurance companies do it.