How Are Premiums Calculated?

We all know that getting car insurance is important. It’s the premiums that are getting us down. To better understand how insurance companies calculate premiums, we have to understand that everyone is part of a risk population. In most cases, the higher the risk associated with a person, the higher his or her premium is likely to be. Some of these risks are:

Gender – the belief that women are more cautious drivers seem to have basis: women drivers statistically are safer drivers, although that trend is beginning to change as more female drivers take the road.
Age – drivers under 25 are at greater risk of being in an accident. Teen drivers have the worst track record. Drivers between the ages of 50 and 65 generally have the safest records, but the older you get, the higher the risk for accidents are.
Purpose for using the vehicle – generally, the more you use your car, and the longer the distance, the higher the risk. Insurance companies will look on whether your car will be used for going to work, used for work, or for leisure only.