Why Do Car Insurance Quotes Vary So Much?
July 24th, 2009. Published under Insurance. No Comments.
Ever wondered why the cost of insurance varies so considerably between insurers and how they set their prices?
Basically there are three factors taken into consideration by insurance companies.
The insurer, the level and type of cover and the perceived risk to the insurer.
The Insurer:
Each company has its own way of setting their rates. This usually depends on the size of the company and the overheads it needs to cover. Which is one reason discounts are usually offered for those who buy their insurance online, as this reduces the overheads. The latest influx of insurance companies are only available online.
These typically offer low cost premiums, but you should remember that cheap does not always mean best. Reports of people buying online insurance and then are unable to pursue claims appears to be on the increase, as such you should opt for companies which have full postal addresses and land-line phone numbers, rather than a PO box number and a mobile phone number.
Level and type of cover:
There are three levels of insurance you can choose from. The most basic level and the one that is required to legally drive on the public highways in the UK is third party only. This provides cover should you caused an accident or injury to a third party. It provides no protection for damage sustained to your car.
The second level provides you with the same cover as with third party but also includes cover against fire and theft, which is recommended for those who live in high risk areas where car crime is known to be rife. Many insurers will only offer this level of cover for some post code areas.
The highest level is comprehensive cover. This level provides the same cover as for third party, fire and theft but it also includes cover for your car and yourself if you caused the accident. This level gives you the most cover, however it is the most expensive option in most cases.
Types of cover:
Optional extras are usually available on all three levels of insurance. Many comprehensive policies also include extras such as glass breakdown cover, but this does vary between the insurers. Having optional extras will automatically increase the cost of the premium.
One way of lowering the cost may be to increase the voluntary excess, however, if you should make a claim the more you will have deducted from the payout money.
Perceived risk:
The higher you are on this pre-set list the more expensive the policy will be. Those who are perceived to be the greatest risk are young, male drivers, those who have previous driving bans related to speeding and/or drink and drug driving offences, high performance cars, modified cars, sports versions and certain professions.
Therefore to lower the cost of your insurance opt for an low market value car, with no modifications, rejoice if you are a female as you are perceived a lower risk than men, opt for a profession which is not deemed as high risk which includes those working in the entertainment industry or work in clubs to name just a few! Again, different insurers have different occupations on their high risk lists which is another good reason why shopping around and getting as many car insurance quotes as you can before deciding which company to opt for.
For more information regarding car insurance quotes go to http://www.swinton.co.uk/