How Your Car Insurance Is Calculated

Want to know how your car insurance rates are calculated? Take a look as we give you the scoop on avoiding high premiums.
Compare Guru
2018-10-16

After buying a new car, the first thing you try to hop on right away is car insurance. 

Sure, I'll get car insurance; demographic factors, what?

What do you mean, don't I just insure the thing? 

Well, auto insurance is based on many factors you may be totally unaware of. Not only is your age, gender, marital status and geographical location taken into account, your credit scores need to perfectly match up too. But why does my gender and having a spouse make a difference either? 

Read on to find out what you can be avoiding to get the most out of your car insurance.

Gender and Age

Everyone has heard about women insurance that allows women lower rates than men. But what is the reasoning behind this?

Simply put, younger men will on average, have more accidents than younger women. This, however, however,s after you have reached a certain age and most insurance companies lower older male's premiums and raise older female's rates.
 

Married Or Single

Just when you thought being married would be a bad thing!

Married couples are actually reported to have fewer accidents (maybe this is due to both sets of eyes on the road paired with a bevvy of backseat driving). If you are a man who has never had an accident or a DUI, you could see your premiums nearly half in value. You are not, however, completely exempt from other factors such as a blotted driving history.
 

Where Do You Live?

Most accidents will occur not more than 2kms from home which is why your geographical positioning is taken into account. Densely populated neighbourhoods run a higher risk of accidents, thefts and collisions leading to injury.

This is due to a multitude of cars in one area. The price to repair your car using local auto bodies will also be taken into account as cost differs from area to area.
 

Credit Score

Your credit score is used by insurance companies to determine how able you are to pay back your loans on time.

The lower your credit score, the higher your premiums will be. Research shows that credit scores can actually accurately predict accidental potential. Statistical data shows that those with a higher credit score incurred fewer accidents costing their insurance companies far less than their customers with low credit scores.
 

Professional Risk Factor

Many auto insurance companies want to know how often you are using your car a day.

This may determine the potential of a car accident when analysed against the frequency of which you are on the road each day. Pilots would not spend much time driving as they simply go from home to the airport.

A journalist or delivery driver may spend hours on the road and are thus likely to have a higher premium rate. Additionally, if you are a police officer, paramedic, nun or insurance underwriter, you may enjoy low premiums due to your heightened caution compared to the average driver when driving.