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What are the Bases of Premium Charges?


Why do we need to get car insurance? Perhaps many have asked the question, and many may know the primary answer: because it is required by law. And yet another question follows – Why is it required by law? Basically, it is because being involved in an accident (which is very possible for every driver) causes serious repercussions not only emotionally but financially as well. Getting car insurance would cushion you from very excessive financial charges should you get in an accident. 

Still, many fret over the fact that auto insurance costs a lot. It is quite true that indemnity is costly, but there are really many ways to cut back on your expenses and save you a lot of money. But before that, you must first know the factors which affect the increase or decrease of premium charges. Knowing these factors would enable you to decide according to your own situation and circumstance. 


Young drivers, especially first time drivers, are generally charged higher premiums. This is because of their general recklessness and immaturity. Seniors although matured and responsible, are also charged higher auto indemnity rates because they are deemed to be less physically able, hence their high probability of being involved in accidents. Those belonging to the middle-aged group (35-50 years) are given lower rates because they are not as immature as young adults, but still as physically capable. 


Men generally drive more miles than females, which mean that they have even higher risks of being involved in accidents. This is true for all ages. The consequence is higher premiums for men than for women. 

Marital Status

Unmarried people are charged higher premiums than those with families. 


 In this aspect, auto insurance companies vary in how they evaluate the distance covered everywhere. Some companies do not take this into consideration at all. Some companies which do consider this may give discounts if the client proves that he or she drives not very often. This is most often applicable to retired seniors living in pensions who only drive only occasionally, for pleasure. 

Car Model

 The older the make or model of the car, the lower the premiums. The reason for this is because in case of accidents, newer models, being new and novel would be more likely be more difficult to repair than older models. You may also be given discounts if your car is midsized or compact, unlike sports and muscle cars. 

Once you are familiar with these factors, shopping for low cost car insurance wouldn't be such a hassle.