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Car Insurance Pricing Plans
The law requires liability insurance for all drivers and
vehicles. This means that if you are involved in a serious
accident, and it turns out that it was your fault, your insurance
company will pay out any claims that are made against you.
Extra coverage on your own vehicle, called comprehensive insurance,
is optional.
Insurance companies based on a number of risk factors will
calculate the price you pay for this insurance. Basically
how it works is the more they feel you are at risk of crashing,
and the more they think the resulting crash will cost them,
the higher the premium you'll pay.
Assessment
Common factors that will be used to assess the premium are
the value of the car you're driving, the safety of that vehicle,
the coverage you want, will there be deductibles or limits
etc.? How much you'll drive the car, how your driving record
stands, how long you've held your license, your age, and if
you are young, also your sex.
The premium is then calculated. Usually there is a flat per
car, per year rate that everyone pays, regardless of other
factors. The other factors will then alter this rate, generally
upwards. So if your car is especially fast or dangerous your
rate will be increased by a set amount. If it is very old,
your rate goes up. If you've had one or more accidents in
the past, your rate will go up. If you're young and male,
your rate will go up. The more of these factors you satisfy,
the more your rate will be going up.
Discounts
As a sales enhancement, many car insurers offer a "low
estimated future mileage" discount to customers who predict
that the car's mileage will be below some stated limit during
the next premium period. There is no verification involved
and no additional charge if the car is subsequently driven
more than the stated amount. This arbitrary discount tends
to foster customer belief in the mistaken idea that "miles"
are just one of many classification factors used to raise
or lower prices from the territorial base rate. In fact, odometer
miles (which insurers do not use) are not a factor but a metric
- the only valid basis for measuring each car's consumption
of insurance protection in on-the-road use.
The best way to save on car insurance is to shop around,
keep a good clean driving record, drive safely, and choose
reliable cars that are not known for their power and speed.
About the Author
Joseph Kenny is the webmaster of the insurance site http://www.insure121.com/
where you will find information, news and links to the leading
providers of car insurance in the UK.
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