How Are Car Insurance Premiums Calculated?
At times trying to determine how car insurance companies calculate your car insurance premiums can seem nonsensical – after all, phone 3 different car insurance companies and they’ll give you 3 different quotes for agreeing to insure your car! So, if you have ever wondered how the premiums on your car are calculated, wonder no more!
Age
One of the most important factors that will determine whether you have to pay a high car insurance premium or a cheap car insurance premium will be your age. In particular, the insurance company will want to know whether or not you are under the age of 25 or over the age of 25. If you are over 25 years old, then you should be expecting to pay a significantly reduced premium than someone under the age of 25.
Occupation
The second factor that has a major influence on your car insurance premiums is your occupation. If you work in an industry that is generally considered to be boring and conservative, such as a bank or law firm, then you can expect to pay less in car insurance premiums than someone who works in a more exciting job than you do!
Gender
Whether you like it or not, if you are a woman then it is likely that your car insurance premiums are going to be lower than if you are a man driving in the UK. Woman are seen as being more sensible than men!
Experience
The next factor that will be used to determine your premiums will be how long you have been driving in the UK. Importantly, the insurance company will want to know if you have a no claims bonus. They’ll also want to know if you have points on your driving licence and/or if you have ever been banned from driving in the UK. If you do have points or have been banned from driving, you should be prepared to answer why.
Car
The next important factor will be the type and value of car you are insuring. If you want to insure an expensive car, such as a BMW or Jaguar, your premiums are going to be much higher than if you want to insure a normal car, such as a Ford. Also:
- the age
- model
- mileage
- registration number
- engine capacity and type
will all have a part to play in this calculation.
How much driving you do
In certain cases, the number of miles you expect to drive each year will be included in your insurance premium calculation.
Where you live
Finally, where you live will have a bearing on what the chances are of the car being stolen or damaged. As a result, this will be an important factor in calculating your car insurance premium.
As you can no doubt see, all-in-all car insurance premiums are a calculation done by the insurer on the chances that they’ll be asked to payout on your policy. As such, the overriding factor that makes such a large difference in each car insurance quotation you get will be what the insurer thinks the chances are of him having to pay.
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