Some people pay more than others for same insurance product
factors such as age and behavior, are considered before a insurance quote is given.
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June 14 - Insurance premiums are not all black and white, as many consumers have found.
Before giving a quote for an insurance policy, the company will consider a number of factors, says the Managing Director of Alexander Forbes Insurance, Gari Dombo.
This explains why consumers may find themselves paying more than their family members or friends for the exact same product.
"An insurer will calculate the average cost of different types of risk by examining claims histories," said Dombo. "Premiums and discounts are calculated based on the ratio of factor that contribute to or reduce risk, with assumptions of future trends and profit being factored into the calculation."
However, insurance companies will not simply 'throw a number' and all efforts are made to ensure that the insurance premiums are fair and competitive.
Rating criteria include gender, age and marital status, as well as details of the item being insured such as model, security features and replacement value.
When relating to motor insurance, Dombo said: "The status of the driver is also an important factor in premium calculation."
Naturally, a luxury car that has expensive parts being driven by a young driver will carry a much higher insurance premium than other types of models and driver.
As such "one should take particular notice of the insurance cost it will attract," before buying a new car, warns Dombo.
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