When calculating insurance premium charges paid by individual companies, there are various factors considered. These factors vary depending on the jurisdiction and local laws of the area. The main source of the basis of insurance premiums paid is based upon several factors which have been computed.
The first of these factors; and at times most crucial; is the age of the driver. The age of the driver has a direct bearing on the insurance rate that the person may be charged. Statistics have shown that younger drivers tend to be careless and inexperienced. This in effect makes them high risk clients, and their premiums are higher, as opposed to the older group of drivers.
The vehicle being driven is also another crucial factor to be considered. A very fast sports car with high specifications will ordinarily cost more; as opposed to a small car that has a smaller engine. This is because the sports car has a higher probability of being in an accident, in comparison to a vehicle with smaller specifications.
In some instances, gender has been used as a factor to determine the rate of premiums paid; though it has received serious opposition from women. Statistics show that female drivers are involved in more accidents than their male counterparts; thus some companies charge women more, due to their increased risk of being involved in an accident.
If you happen to be married, you will in most cases be required to pay a lower premium; as opposed to other individual that are single. Statistics have shown that married people have less of a tendency to be involved in accidents; and when factored into the equation, this calculation places them as low risk clients; thus they are required to pay much lower premiums.
Some insurance companies have embarked on a trial of an insurance cover that is based on the distance that the vehicle travels. This is a product that is mainly marketed to people who rarely use the vehicle, and do not travel much. The option to be insured for the distance they cover translates to lower premiums if they cover lower distances; as opposed to drivers of vehicles that cover longer distances.
Credit history may also be a factor used in the determination of insurance premiums paid. According to the system, drivers with high credit ratings are given lower premiums as they are considered lower risk clients than those people who have low credit ratings.