How Motor Insurance Companies Calculate Premiums

Certainly, insurance companies offer insurance to motorists based on risk modeling techniques. And over the years, auto insurance companies have streamlined their risk modeling techniques. Actually, the main task is usually to determine the risk classification of an applicant in order to arrive at the correct level of premium to charge.

When it comes to calculating premiums, the main determinant factor is the value of the car. However, keep reading to find out other factors that are used by insurance companies in calculating premiums.

Type of Insurance Cover Required

They type of cover you need probably plays a significant role in determining the amount of premiums you pay to a motor insurance company. Typically, comprehensive covers attract the highest premiums as it insures you against a wide range of risks. On the other hand, third party and theft policy cover is cheaper than comprehensive auto insurance yet the cover cannot protect you against accidental damage.

Actually, third party cover only protects you from liabilities arising from third parties affected by an accident involving your vehicle. Motor insurance carriers also consider how the vehicle is used in calculating monthly premiums. Generally, private cars attract lower premiums compared to public service cars. It’s for this reason that auto insurance companies provide cheap insurance cover to private motorists.

Sex of the Driver

Some auto insurance companies offer products that greatly target women. It’s very obvious that women tend to be very careful on the roads hence they present diminished risks to insurance providers. Plus, many insurance products offer enhancements that possibly fit into their lifestyles.

For instance, there are those auto insurance companies that offer enhancement that covers a lady driver from the loss of her handbag and this demonstrates that your sex can of course determine the insurance quotes you get. Age of the river is another crucial factor used in calculating your monthly premiums.

Younger drivers tend to be riskier clients as compared to their counterparts and this might be due to their low-risk threshold as well as experience on the road. As a result, their monthly premium is likely to be high.

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Just Publishing Post
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