Several factors determine the car insurance amount you have to pay. Everything from your driving history and the kind of coverage you possess to where you park your vehicle impacts the premium amount. Although the parameters may vary with each company, here’s how car insurance is usually calculated:

1. Age

One of the factors that most insurers consider is age. Young drivers typically have a lower experience behind the wheel, so they are, statistically, more susceptible to be involved in an accident. This means drivers between 17 and 25 years of age have to pay a higher premium amount. Many believe that drivers enjoy the benefit of a lower insurance premium after they reach the age of 25. While this may not always happen, there are also other ways you can use to reduce your premium amount.

2. Type of coverage

Generally, there are several options to pick from when you’re shopping for a car insurance policy. Naturally, the more comprehensive the policy coverage is, the higher the premium amount will be. For instance, an auto insurance policy that only covers liabilities will be relatively inexpensive as compared to a policy that covers liability, collision, medical payments, underinsured, or uninsured motorist insurance.

3. Driving record

If your driving record has been good, you can enjoy the benefit of paying a lower insurance premium. On the other hand, you will be charged a higher premium amount if you have been charged for a serious traffic violation or caused any serious accidents. The premium amount is also higher for first-timers as opposed to others.

4. Gender

Studies prove that women tend to get involved in lesser accidents and have lower Driving Under the Influence (DUIs) accidents. Besides, statistics indicate that the severity of the accidents caused by women is lower as compared to those that involve men. So, if all things are kept equal, women are likely to pay a lower premium than men.

5. Other factors

Based on the type of insurance you are buying, the insurance agent or company will consider various personal factors to determine the premium amount. Most insurance companies analyze common factors like your credit history, claims history, marital status, family medical history, job, lifestyle, and geographical location before determining the premium amount.

If you’re wondering how car insurance is calculated, these are among the most common factors that affect the premium amount for your car insurance. Also, this is not an exhaustive list, so inquire of your local car insurance company about the factors prevalent in your area before purchasing a policy. Along with that, shop around and compare multiple policies from different providers before making a decision.