Car insurance prices are calculated on the basis of various factors, including the credit history of the policy seeker. Car insurance prices are a clear indicator of the risk that a consumer represents to the insurance company. Higher premium charges mean higher risk.
How are Car Insurance Prices Calculated?
The various factors used to calculate car insurance prices include:
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Age of the driver: Statistically, drivers below 25 years of age are prone to more accidents, while drivers in the age-group of 50-65 years are considered the safest.
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Marital Status: Single people tend to be more careless while driving, statistically, and therefore attract higher premiums.
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Geography: The place where you stay also matters. If you stay in a densely populated area, the probability of meeting with an accident increases and so does the premium. Areas with higher vehicle theft history also attract higher premiums.
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Driving violations: Tickets or any record of accidents decrease your reliability as a safe driver and thus attract higher premiums. Some insurance companies penalize you for as long as five years. The premium might be decreased after this time period lapses.
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Vehicle type: Top end vehicle models need more care and thus entail higher premiums.
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Accident claims: A history of no claims improves your image with the insurance companies and they offer the best car insurance prices.
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Credit rating: People with a poor credit history attract higher premiums, as they are considered to be in the high risk category.
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Occupation: What you do is also considered as a factor in calculating car insurance prices. A desk job would mean a lower premium than a job that needs you to travel extensively.
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Education: Education reflects a lot about a person and his psychology. Educated people tend to be least risky at driving, which is reflected in the lower premium that the companies charge them.
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Work-distance and total miles per year: The more you drive, the more are the chances of an accident occurring. Therefore, insurance companies consider the distance traveled as well to calculate car insurance prices.
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Purpose of the vehicle, i.e., whether it is used for commercial or private purposes.
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Theft prevention gadgets installed in your car.
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Number of cars and drivers to be insured
Other factors, such as the condition and age of the vehicle are also used to calculate car insurance prices.