Car insurance is a must today. There are many factors that influence the rate of insurance you have to pay. The way how car insurance premiums are calculated reflects how likely the insurance company thinks you will have an accident. If you seem to be a risky customer, the company shall charge you a high premium. On the other hand, for safe drivers insurance companies offer lower premiums and also reward them with discounts. Following are some of the factors that determine how car insurance premiums are calculated.

• Driving history: –

This is one of the biggest factors influencing car insurance premiums. The better the driving history, having no accidents or serious traffic violations your premium shall be lower. So a clean driving history shall lead to lower premiums. On the other hand, poor driving record with traffic violation tickets and involvement in accidents shall pose a great risk to the insurance company which it will compensate through high premium charges.

• Car mileage: –

If you use your car for travelling to and from the workplace, especially if your office is located at a distance, the insurance company is likely to charge a high premium. That is, the greater the distance a car travels the higher the chances that it will have an accident. So the higher the premium shall be calculated. On the contrary, if a car is used only for leisurely purpose or is seldom used the company shall charge a lower premium.

• Age and Gender : –

It is a general trend that young drivers especially teenagers are more prone to having accidents. Similarly old age drivers who have troubled vision are also risky for insurance company. While, middle aged and mature drivers are safer ones and are less likely to have accidents. So this is also one of the factors that determine how car insurance premiums are calculated.

Similarly, gender is also an influence on premium rate. Women generally are more cautious and have fewer and lesser serious accidents than men. So they are generally charged a lower premium than men. However, it is not a thumb rule and driver history is carefully investigated.

• Car make and model: –

This is another very important factor determining how car insurance premiums are calculated. The car make and model, engine and most importantly, its quality of repair and maintenance all influence premium rates. If a car is well maintained and is equipped with safety gadgets and alarms it is likely that the company shall charge a lower premium. If however, if a car is more likely to harm another car or property in an accident the company shall charge a higher premium.

• Area of residence: –

Small towns and rural areas where generally driving is lesser compared to urban areas with greater mileage, chances of theft and accidents call for lower premiums. Moreover, weather influence such as areas featuring the high amount of snow and rainfall leading to chances of the great weather related accidents call for higher premiums.