Reviewed by Sep 30, 2020| Updated on
Insurance coverage is the amount of coverage set forth by the insurer to the policyholder. There are various types of insurance coverages—life insurance, bike insurance, and car insurance, among others.
Insurance coverages provide subscribers with the opportunity to recover from financial losses caused by unforeseen events, such as accidents or the death of an income-generating member of the family. There are various factors that are taken into account when determining insurance coverages.
In the case of car insurance coverage, young drivers are generally charged higher premiums compared to middle-aged or older drivers as the probability of the latter being involved in accidents are low considering years of driving experience.
There are two types of insurance coverage—Auto insurance coverage and life insurance coverage.
Auto insurance coverage: When it comes to auto insurance coverage, the premiums charged are determined by the subscriber’s driving history and track record. Also, the probability of being involved in an accident for young drivers is high due to fewer years of experience when compared to drivers who have longer driving experience. This is why most of the young drivers are charged a higher premium than the older drivers.
Another factor taken into consideration when determining the premium is the purpose of the vehicle—personal use or commercial use. Also, if a subscriber drives long distances on a regular basis, he/she will be required to pay higher premiums.
Life insurance coverage: The premiums for life insurance, on the other hand, depends primarily on the age of the insured party. This is why younger individuals pay lower premiums when compared to older people. Also, the gender of the insured party is also taken into account when determining the premium. This is because women are more likely to live longer than men. This results in women paying lower premiums when compared to men.