HOW INSURANCE PREMIUMS ARE FIGURED

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by: jedc.mcmanus
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Date: Tue, 15 Mar 2011 Time: 12:22 AM
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In case of a serious accident, auto insurance will save your money and even life, so it is essential to do so. The premium costs are determined by some factors if you are wondering what the criteria is. Keep in mind that if your premium rated increased in that year, your insurance company will continue to do so in the following years to make up for the loss.
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Overall Factors
For auto insurance companies, medical expenses are one of the most important costs. Millions of Americans are injured every year in car accidents. So the medical bills are quite in terms of thousands and ten-thousands of dollars. The recent report by AAA Automobile Association of America claims that the cost is one thousand dollar per person and over 160 million in total. These costs may seem incredible, experts say it could be even higher and naturally, this affects auto insurance premium costs. Repairs, as well, are affecting premiums, which are thought to cost close to $100-billion per year.
Although today there are many more drivers on America's roads and highways, fortunately, since 1960, the cost to repair vehicles has dropped.
The increases in numbers, the increase in the accidents are inevitable. The costs of the court also play a role in the cost of premiums. For each auto accident that is taken to court, the average cost awarded is over a quarter-of-a-million dollars. Lastly, auto theft plays a huge role in premium costs. Over 1-million cars are stolen each year at an average cost to insurance companies of $10,000, which means it’s almost $10-billion total. Knowledge you can use when choosing a new car is that some cars are more likely to attract attention than others. 
Individual Factors
The uncontrollable issues such as age, driving record and that you have taken a driver education classes determine the premium costs as well. Insurance companies know that experience is related with age and the older you get, you are less likely to pay expensive premiums. The discounts start at the age of 21 or after 5 years of experience. There are more reductions available at the age of 24 or 25. Furthermore, men are proven to make more accidents compared to women, so sex plays a role as well. Married men receive discount due to their responsible appearance and less likely to have accidents. The driving record also plays an important role in auto insurance rates. Matter of fact, the most controllable part of the factors is this. By driving carefully and obeying the laws and avoid drinking, getting speed tickets and light rules, you can minimize your chance in face of an accident. Insurance companies have such a thing called the “safe driver discount” which is determined by your record. Finally, if you have a certificate explaining you took a defensive driving class, you are likely to receive a discount. Responsible students with high grade point averages also get discounts.

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