Keep me logged in until I sign out. Premiums generally are determined based on an estimate of the risk of loss. For life or health insurance, the age and health of the insured will determine the likelihood the insurance company will have to pay a large claim during the policy term. For permanent life insurance, the insurance company will almost always have to pay, so the premium is based on how long the insurance company will have before it expects to pay death benefits. Automobile insurers look to such factors as the driver's driving record, claims-made history, and the cost to repair or replace the car being driven.
Younger drivers tend to have more accidents, so as a group they pay higher premiums.
In some states, certain factors such as gender or marital status cannot be used in determining the rates for certain types of insurance. Premium discounts may be provided for safety devices that decrease the likelihood of injury, such as antilock brakes and air bags. Property insurance premiums are based on the value of the property and the factors that increase or decrease the likelihood that the property will be damaged. For instance, homes located far from a fire station pay higher premiums because they are more likely to suffer significant damage than homes closer to the station. Liability premiums are calculated based on the likelihood that the insured will injure a third party.