There are a number of factors that come into play when an insurance company determines your premiums. Generally speaking, they are looking for indicators that will tell them how responsible you are on the road and what it will cost in the event that you get into a collision or have your vehicle broken into or stolen. In this post of the Insurance Experts blog, we will discuss the biggest factors that come into play when an insurance company calculates your premium.
One of the most important factors that affects your premium is driving experience: how long have you been on the road, how many accidents have you been in and how many speeding tickets have you accumulated? The better your driving record --and thus the less of a risk you are on the road-- the lower your premiums will be. Safe driving pays!
Some vehicles are riskier to drive or are more likely to be broken into. For this reason, owners with different vehicles will often pay different premiums. If you're driving an SUV with a bad roll-over record, you may be paying more for premiums. If you're cruising around in a Ferrari, the parts of which can be very expensive, you may be paying more for premiums. Finally, if you own a Civic, renowned for being a car thief magnet, your comprehensive rates may be a little higher.
Age and sex
Unfortunately, young males pay more for premiums than anyone else. Statistically, young men are responsible for the greatest number of collisions and therefore pay more for premiums. Women tend to be considered less risky, in general, than men as well.
Statistically, the more time you spend in a vehicle, the more likely you are to be involved in a collision. Therefore, if you only drive a few thousands kilometres a year, you will probably pay less than someone who commutes every day to work and tacks on 20,000 kilometres a year. There is more likelihood of an accident occurring for those who are exposed to the dangers of traffic on a daily basis.
If you live in the countryside, you may pay less for premiums. Cities are considered more dangerous, on average, than rural areas. If you live in a city, you are more exposed to crime and greater traffic risk. With more people on the road, there is a greater chance you'll be involved in a collision.
These factors can seem a bit daunting. Some of them you can't change and others you can't change without great personal cost -- nobody wants to move from their home because premiums are too expensive in their neighbourhood. However, you can make a difference to your premiums by driving safely and driving less. The longer you drive without an accident, the more likely you are to see a serious reduction in your premiums. Similarly, if you drive only when you have to and decrease your declared vehicle usage, your insurance company may give you a reduction on your premiums.