Reader’s Question:

How do insurance companies compute for vehicle insurance premium?

Candy

Birmingham AL

There are instances when vehicle insurance premium is government mandated. The computation will follow government-drafted regulations but will vary because insurers may put more weight on one factor over another. In most cases though, premium computation differs depending on the company. Each insurer will also have its own schemes in order to make the resulting quote attractive to potential customers. Generally though, the insurance companies use the same factors when computing for premiums. These factors are taken into account when computing for vehicle insurance premium: gender, age, marital status, vehicle classification, mileage, traffic violations, and road accidents involved with. How vehicle insurance premium will come out depends on individual company’s discretion so long as they do not violate any laws. Some may consider age non-material in determining how risky a particular person is, while others will put a lot of attention on that aspect. Most companies think that young drivers are risky because there are certain expectations and stereotypes regarding them. There are others too who do not generalize and tend to take each case on face value. Marital status is also taken into account because it is believed that married people are more stable in their ways due to their families and responsibilities.