How do companies determine premiums according to age?


Car insurance is required to all drivers who own a car, whatever age they may be, and wants to drive it legally. In fact, the minimum state requirements for car insurance are applicable to drivers of all ages, whether they may be teens, adults, or senior citizens. However it is also true that your age can actually affect how high or how low the insurance premiums you must pay. In short, being a teen driver, an adult driver, or a senior citizen driver actually has bearing on car insurance rates. In this case, many consumers are not aware on why the age on a driver actually affects car insurance premiums.

In this case, one of the things that you must remember is that the amount of the car insurance premium that you will have to pay actually depends upon the risk that is involved whenever you are hitting the road and driving your car. This is because of the fact that all of these risks actually determine the amount that your car insurance company has to pay in cases of accidents. This means that the more the risks that a driver is involved in an accident, the higher chances that the car insurance company must have to pay the insurance holder.

Of course, looking at car insurance from a business perspective, this means losses to the car insurance company. The sad fact is, your age also affects the chances of you being involved in vehicular accidents by the time you are hitting the road. This is likewise the reason why your age actually determines in part your car insurance premiums. Of course, all drovers would want tom pay for the lowest premiums possible. However, this age bias is actually supported by facts.

Generally, teens have higher premiums to pay. This is because facts actually show that teens are very likely to be involved in vehicular accidents, especially the first time drivers. Usually, teens are seen to be adventurous and fun-seeking. Car insurance companies see this attitude present even while teenagers are driving their respective cars. Generally, teen drivers are seen to drive fast, to be irrational, immature, and are more likely to violate traffic rules. In this case, teenage drivers are also deemed as very risky drivers, which explain the reason why they must pay high insurance premiums.

Also, adults, especially the ones that turn 25 years, are seen as more mature and more rational drivers, making them less risky drovers. That is why they have relatively low premiums to pay. In the case of senior citizens, their health may also affect their premiums, because it likewise affects how risky they actually drive.