How is your insurance calculated?
Insurance is in many ways a bet placed by the insurance company that you will not have an accident. If you do have an accident then the chances are they lose out. So they stack the odds in their favour.
The insurance companies keep huge records of the type of factors that contribute to accidents and penalise those with a little bit more added to the cost of your insurance premiums.
Your premium is made up of lots of little costs added for each of these risk factors. All of the questions asked during a quote are there to determine how gigh a risk you are.
They can be loosely broken down into two groups the driver and the car. Here are some of the factors that influence the cost of you premium.
Gender - although both have a similar number of accidents males tend to have higher claims therefore they have a higher premium.
Age - younger drivers have more accidents therefore a higher premium.
Previous history - If you've had a recent accident then you are statistically more likely to have another even if it wasn't you fault. Also penalty might suggest you take risks, all these add up to a higher premium.
Experience - the more years of driving experience the less likely you are to have an accident.
Address - Where you live will determine whether you are more or less likely to have an accident.
Make and model - some cars are involved in more accidents than others, others are more expensive to repair.
Engine size - the higher the engine size, the more likely an accident, again also potentially a higher repair bill.
Miles per year - the more miles the more likely an accident is to occur.
All of these are totted up and the insurers comes up with a quote. Of course everyone uses slightly different figures and some insurers place more weight on certain things than others. This is a good reason to shop around.