ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How is your motor insurance premium worked out?

Updated on August 4, 2017

It all depends how big of a risk you are to insure.

It all comes down to two basic factors:

a) How likely are you to make a claim?

b) And if you do, how much is it likely to cost.

Young Drivers.

The reason why drivers under 25 pay such very high premiums and why their policies carry such a high excess is because they are far more likely to be involved in an accident than any other age group. They are inexperienced and all too often reckless when they are behind the wheel. 1 in 4 accidents involve drivers under 25 years of age and 99% of all accidents are down to driver error. On top of this young drivers (men usually) like to driver big and powerful cars often with some sort of modification intended to make it look bigger and more powerful than it actually is. Consequently when a young driver does have an accident the cost of the claim to the insurance company will be considerable.

The Business Driver.

This is why the businessman also pays a high premium for his insurance policy. Not because he is a bad driver but simply because he is driving long distances up and down the motorway everyday. And the more he drives the greater the probability that he will be involved in an accident and in all likelihood a high speed accident. And if he also drives a prestige vehicle this will all increase the cost of any claim significantly. Repairing a damaged BMW5 that was involved in an accident at 70 mph is far more expensive to repair than a Micra.

The Commuter.

On the other hand a commuter who travels to work everyday in (typically) a small family car will pay far less for his policy. They travel short distances at set times along a route they know very well at modest speeds. Consequently the risk of insuring this category of driver is reduced.

The Social Driver.

The housewife and the OAP will pay the lowest premium of all. They hardly use their cars at all and when they do it’s for going shopping once a week and for occasionally visiting friends. They aren’t even on the road often enough to have an accident!

So if you want to save money on your insurance premium it helps if you are: over twenty five, drive an ordinary family car (1.2 or 1.4cc) and only drive it once or twice a week to the local shops.

But of-course there are other factors that an insurance company will take into account when calculating your premium.

a) Where you live has a bearing. If you live in a prosperous area that will increase the cost of your premium. A leafy suburb will provide a car thief with potentially far richer pickings than a street on a working class council estate. If you live in London you will pay far more for your insurance than if you lived in the Scottish Highlands simply because there are so many other cars on those crowded streets you can have a crash with.

b) If you drive a VW Golf and your insurer has had a lot of claims from Golf drivers that year it will also increase your premium.

c) If you live in, lets say, Cheshire and your insurance company has had lots of claims from people in Cheshire then that again this will increase your premium.

d) Something like 2 million vehicles a year are damaged by vandalism and some postcodes are notorious for their record of vandalism. And do you live near a pub? Many cars are vandalised or broken into by people leaving pubs.

e) What do you do for a living? Do you use your car at night because of your work. If you do your insurance company might not even want to insure you at all.

f) How many convictions do you have on your driving licence? Again, an insurer may refuse to sell you a policy if you have had a conviction for drink driving. And if they do it will certainly be expensive.

g) How many accidents have you had in the last three years? A bad driving history will certainly increase the cost of your premium.

h) Are there any modifications to your car? If you do it will increase the premium for three reasons. First, a Ford Fiesta with modifications is far more expensive to repair than one without. Secondly, it is far more likely to attract the attentions of car thieves. And thirdly an insurance company will assume the driver is probably a bit of a ‘boy racer’ and boy racers are far more likely to have a crash.

i) A major cost to an insurance company are accidents which include personal injury claims . High speed impacts, accidents in which a vehicle has hit a tree or a wall, an accident involving pedestrians, cyclists and motor bikes will almost certainly result in an injury claim. But the truth is no matter how minor the crash may have been a claim for personal injury can never be discounted. Indeed the claim for personal injury may cost an insurer more than the repairs to the vehicles involved.

j) Hire . The innocent party in an accident will be entitled to a hire vehicle “suitable for their needs” free of charge until the repairs to their own vehicle are completed. Again this can run into thousands of pounds especially if the innocent party needs a prestige vehicle.

So to have any chance of keeping the cost of your insurance really low it will help if you are: over twenty five, you have no young drivers on your policy, you drive a small family car with no modifications which you only use once or twice a week for short journeys to the local shops or to visit friends, you live in the Scottish Highlands, you have a clean licence and have had no accidents or claims in the last five years (and therefore maximum No Claims Discount).

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)