We all know that having a car is an indispensible part of our daily routines. If we decide to invest in a car we should also be able to take care of it and ourselves when out on the roads. Having car insurance is a vital part of our security in day to day life. Many different factors decide how much of a premium must be paid by various car owners based on the requirements. These factors are statistically determined by research done on various risk factors by people. The important determinants in most cases are the gender of the driver, driving history, age, and use of vehicle among others.
Vehicle insurance also depends on what type of coverage you take, It could be third party insurance or insurance of vehicle, person’s medical coverage, personal injury and so on. There is a minimum premium set by the government based on actuarial and statistical data to determine how much of minimum coverage any given individual must have at a point in time.
Let’s look at how the various factors decide how much premiums will vary for individuals. Firstly considering age, a person who is a beginner at driving like a teenager with no previous history or records will definitely have to pay a higher insurance premium than someone who has been on the roads for long. Those taking out insurance between the ages of 50 and 60 tend to have the lowest premiums as they are elderly and careful drivers. There are also however discounts from many U.S. based insurance companies to students who are residing away from home and need to travel frequently and also for those with good academic records indicating stable characters.
Another factor is gender. According to statistical data men travel more miles on an average than women, thus the potential for accidents increases for men than for women. Youth surcharge rates are thus preferentially towards women, than men although adult charges remain more or less same.
Marital status is another factor that affects people in terms of determining the insurance premiums, in case of married couples the insurance premiums tend to be lesser as there is greater financial stability and single persons have to pay more on their insurance premiums.
In many states an important factor that affects the insurance premium is the driving history of the individual. In case there are a lot of violations in traffic by a person or lots of accidents on their driving records, they will have to shell out more towards payments on the insurance.
Another important factor in underwriting risk on motorized vehicles is vehicle classification. Those cars which are high speed and performance oriented or belong to the high end vehicles category will have a higher premium as there is greater chance of risky behavior in these vehicles. Auto insurance premiums on high performance vehicles like Porsche’s, BMW’s and the like will definitely be higher than on the average car. Auto insurance is also determined after studies on mechanical malfunction of the vehicle of a given year or make of the car as well. Some car insurance companies also determine the insurance based on how long the vehicle has been used as well. Over road distance, daily destinations and such factors come into play here.
