Factors That Affect Auto Insurance Premiums

Are you thinking of buying an auto insurance policy? If so, you might want to have an idea how the actuaries for auto insurance calculate for the premiums. Several factors affect the computation for the premiums such as the age, marital status and the type of residence of the applicant. The formulas applied in the calculation of auto insurance premium allow the drivers with the lowest risks to get the best premiums; on the other hand, this computation scheme is for charging the right amount for drivers with the highest risk.

Here are the factors considered by actuators in computing for the auto insurance premiums.


  • Males under the age of 26 have higher premiums. This also applies to teenagers and those in their early twenties (regardless of the gender).
  • Students who have a 3.0 GPA (or even higher than that) get to avail of lower premiums, regardless of the age and the gender. The same holds true to those who have undergone formal driving training and course on accident prevention.
  • Some states require drivers aged 70 and older to pay a higher premium because of the increased risk in driving at such age.

Marital status

  • Married people can get a married discount when they apply for auto insurance. Moreover, multi-car (for married couples) can provide great discounts for the insurance.
  • However, the driving record of each spouse is still part of the factors considered in the calculation of the premium.

Type of residence

  • Those who live in a rural area pay less than those people whose residence is within an urban area.
  • People living in an urban area qualify as higher risk drivers because of more exposure to other vehicles within the city, as compared to those living in a rural area.

These factors are only a few of what the actuaries consider in computing an applicant’s premium for auto insurance. However, you must always provide accurate pieces of information on the items presented here; otherwise, you might end up suffering from the penalties for rate evasion or insurance fraud. You have to remember that insurance companies have sources to verify the information you have provided them. You can always lower the premium by having a good driving record, in which case your current status leads you to pay a much higher premium.

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