Perplexed with the difference in premiums for the car insurance. Car Insurance Premium is the price paid by the insured for the bodily injury, collision coverage, comprehensive coverage and property injury liability – depending upon the type of policy chosen by the insured. Depending on the jurisdiction the premiums are either mandated by government or calculated by insurance agency in accordance to the legislation setup by the government. When the premium is not mandated by government it is calculated from actuary based statistical data.
The above conventional system of car insuance premium calculation is based on past experiences of the insurance agency and past records of the driver. The modern method of car insurance premium calculation is based on Telematic System. the actual driving performance of a given driver is monitored and communicated directly to the insurance company. The insurance company then assigns the driver to a risk class based on the monitored driving behavior.
An individual, therefore, can be put into different risk classes from month to month depending upon how they drive. Different methods of thematic systems have been invented and patented by auto insurance company. The major difference between the conventional method of car insurance premium calculation was based on past experience of the company and past records of the driver whereas the modern method of calculating premium is based on the present performance of the driver. No matter what method of car insurance premium caculation is followed bottom line is that the drivers should perform safe driving to protect themselves, their family members and all those who are thrown to the uncertainties of life for traveling on road.