What do insurance companies consider when they determine your premium?

Answer 1

Any insurance underwriter will first consider what type of cover the insured wants.

With motor vehicle insurance, for example, a person could want cover for any damage other than to their own vehicle (known as third party property damage) or they could want to include their own vehicle as well (known as comprehensive insurance).

In determining the premium an underwriter must assess the risk. To do this he or she will need to know the insured's age, experience and driving record (including any offences) as well as the type, age, engine and value of the motor vehicle. The residential address is another factor as conditions (such as risk of car theft) vary from place to place.

Insurers will also need to know all of the details for anybody who is expected to drive the vehicle. For example, an insurer will always set the premium based on the age of the youngest driver. Finally, the insurer will vary their rates for business and private use.

Laws and policies may be different depending on the jurisdiction (country, state etc.).