How Insurance Companies Calculate Risks?

I am sure you are by now familiar with progressive auto insurance and know at least something about how insurance companies work and how they are making money but you might not know how they calculate their risks. Every insurance company first assesses the risk for them that they will have to take on when insuring your car. This way they can calculate the exact premium you have to pay for in order for them to be safe and you to be insured.

But how exactly do they come up with those numbers?

The most important factor for auto insurance companies is of curse your driving history and record. For example if you have been involved in car accidents caused by you previously. Or if you have had your license suspended or revoked. These are considered red flags by the companies and they will increase your premium based on this. Auto insurance companies also look at the car you drive and what kind of a car it is. For example there are over 50 different risk categories your car can fall into and each of those has its own price range. Luxury and sport cars are considered higher risk for insurance companies.

There are some factors that you can't even have an influence on. Your age, gender, marital status, are you live in, are taken into consideration as well. Students are less likely to have a car accident than are single, young males living in an urban area.

Also if you drive less you are less likely to have a car accident and are considered lower risk than people who spend more time (and miles) in car than you.

Don't just take all of this for granted you can actively participate in some courses about safe driving that will give you extra points and lower your insurance price. For best explanation on how to do this, don't hesitate to contact progressive auto insurance.

A lot of people mystify how various auto insurance companies calculate the price of auto insurance premium and while it might seem complicated, in the end it all comes down to math. The math is used to best calculate the risk of the potential insurer but not in the way you might have suspected it. But before we go on, I'd have to make a personal suggestion if you are on the lookout for a new auto insurance company, make sure to take a look at progressive auto insurance.