A premium is a fee given to an insurer for his services and this premium is calculated differently for everybody. Most of us are aware that the auto insurance premium is affected by certain factors but not many of us know what these factors are. The following paragraphs will elaborate about 5 important factors that are used to calculate your auto insurance premium.
Your Age Will Decide Your Premium
The first deciding factor is your age. Your age is taken as a guideline to decide if you are a risky driver or a safe driver. Over the years it has been noticed that people from the ages of 16 – 25 drive rashly and people who are in between the ages of 25 – 65 are safe drivers. It has also been noticed that people above the age of 65 are more likely to get into an accident due to various reasons. If you are below 25 or above 65 then your auto insurance premium will be higher than someone who is between 25 – 65 years.
Your Gender is another Important Deciding Factor
Over the years it has been noticed that women are safer drivers than men and men are more likely to break the law while driving. Vehicle insurance companies believe that men are more likely to drink and drive, speed, break signals and commit other violations. If you are a man then your auto insurance premium will be higher than a woman.
Your Driving Record is a Crucial Deciding Factor
Your driving record has details of the way you drive, the violations you have committed and other information related to driving. Vehicle insurance companies believe that people who have had few or no accidents, people who do not have speeding tickets and people who are safe drivers are safer to insure since they are less likely to have an accident. If you have a bad driving record, speeding tickets and other violations on your record then your auto insurance premium will be affected significantly.
Your Car Model and Make Will Decide Your Premium
Expensive cars that have hard to replace spare parts or costly spare parts will be charged a higher premium than cars that are economical. Cars that give a good mileage will be insured for a lesser price than cars that give only a few miles. Teenagers who want to buy their first car are always advised to choose an economical car since this will bring down their insurance premium significantly.
Your Credit History is Also Used to Determine Your Premium
Your credit history and credit score are always used to calculate your premium. Your past financial actions are used to calculate your future financial situation. People, who have taken a lot of debts, defaulted or made a lot of late payments are often asked to pay a higher premium than people who have a good credit history. If you have a lot of unpaid installments or if you miss payments often then you should consider settling your debts before you opt for a vehicle insurance.
All the factors mentioned above are used to calculate the premium you will be asked to pay. The best way to get a low insurance premium is to compare quotes from various companies and choose a company that gives you many benefits for a lesser price.