How is My Auto Insurance Premium Calculated?
Have you ever wondered just what exactly goes into calculating your auto insurance premium?
Well, we’re here to walk you through it. The premise of insurance is that each individual contributes a relatively small amount into a larger pool. This money is used to cover for costs (claims) when there is a car accident.
The basics of insurance
There are a lot of unforeseen accidents that happen in this world. The idea behind insurance is that only a small percentage of contributors will have losses that will need to be covered. The small amount paid to the insurance pool per month (or per year) leads to a much larger amount of coverage in the event that damage occurs. Therefore, the entire group paying has protection, or “insurance”, for adverse events.
Related Article :
What’s the difference between an underwriter and an actuary?
You may have heard of these insurance terms before. Actuaries are math whizzes who analyze the overall risks and likelihood of claims. They determine what will make a policyholder more or less likely to have an accident that leads to a claim, and determine how to fairly distribute the premiums among policyholders. They also analyze general industry trends and try to predict future claims needs.
In contrast, when you apply for an insurance policy, an underwriter will sell you the policy (or through your insurance broker). The underwriter reviews and evaluates your insurance risk and the extent of your coverage based on pre-determined factors.
So, what exactly is considered when calculating my auto insurance premium?
The basic factors in determining your auto insurance premium are:
- Details of your car including make, model, production year, etc.
- Your demographics including age , gender and marital status.
- Class of driving license.
- Where you live.
- How often you drive and how you use your car (i.e. commuting).
- Past driving record including driving tickets , driving conviction , insurance history , etc .
Now that you know how your auto insurance premium is calculated, you’d probably love to lower it, right?
At isure, we offer the largest list of auto insurance discounts in the marketplace and competitive bidding saves you money without reducing coverage. Get a Free Auto insurance quote now !
Other Articles :
1: Tips and tricks to help you save on your auto insurance without compromising your coverage
2: Why Ontarians are paying the highest auto insurance rates
Tags: Auto Insurance • Calculate Insurance Premium • Cancelling Auto Insurance