Everyone wants to get a low premium on insurance, but it isn’t always possible. Although there are some things that are in your control and can help you reduce your premium, there are many other things, which you can’t do anything about. Either way, it helps to understand which factors are going to impact your premiums so that you can shop smartly around those factors.
The single most important factor that could increase your premium is your past driving record. If you have had one or more accidents in the past 3-5 years, then you would have to pay more. Similarly, if you have been involved in any major violations of traffic rules, you would again have to pay the price. It is simple risk analysis on the part of the company.
If you get involved in accidents or traffic violations, it shows that you could be a risky driver and such incidents could happen again. The company is just covering itself for such an eventuality.
Another important factor is your age. When you are below 21, you pay a high premium. When you hit 21, the premium becomes lower. When you cross 25, the premium is further lowered. And when you reach 70, there could be a drastic increase in the premium. The idea is that when you are young, you tend to be more careless and when you are beyond 70, your driving skills deteriorate quickly, making you a risky customer for the company.
Your occupation also plays some role in what you’ll have to pay for your insurance. Insurance companies use their statistical models to try to guess the occupations that tend to have a lower risk profile. If you are in a stable and well paying profession like medicine, which also demands a lot of maturity and responsibility, you might end up getting a lower premium.
Your location also has an impact on the premium. If you live in an area where accidents and thefts happen too often then expect to pay more. The company may also take into account whether the car is for business or individual use. Individual owners are usually more careful with the vehicle and thus have to pay a lower premium.
Along with these major factors, a lot of minor ones are also used to determine your risk profile and hence your premium. These include gender, occupation, and your level of education.