Tuesday, 19 August 2014

Insurance Premiums - How they are calculated & how you can reduce your cost

Insurance premiums are calculated after information has been collected about a driver and as a result each person's premium is unique to them, their vehicle and their circumstances. To put it simply each insurer is looking at how much of a risk you present and how likely it is that you will make a claim. In this blog post we will look at just some of the factors that affect the price of your insurance premium. The key thing to remember when giving your information make sure it is 100% correct and truthful. In the event of the claim the insurance company will be looking for reasons to save money and not to pay out. 

Personal Factors

Age - This is the obvious one that comes to mind, driver's at both ends of the age range are seen as increased risk. 
Gender - This used to make a difference but after a European Court of Justice ruling in 2012 gender is no longer allowed to affect your premium on the grounds of gender equality. 
Occupation - Your job title affects your premium and certain occupations are seen as more of  risk. People can sometimes reduce their premium by using an alternative job title and websites such as this one have a tool to do that. The insurance companies are looking to close this loophole and now might ask you for your job title and the sector you work in. 
Location - The insurer will look at your postcode and the crime rates in the area.
Claims History & Penalty Points - Purely looking at you as a risk the insurer will look at how many penalty points are in your licence and what they were awarded for, if you have any motoring convictions past or present and your claims history which includes dates of claims, circumstances, fault and costs incurred by the insurer at the time. 
Extra Driving Tests - Young drivers will see a reduction on costs if they complete a Pass Plus course. Similar reductions may be given to advanced drivers. 

Insurance Cover

Usage - Commuting or business use will increase the cost of your insurance. One piece of small print you need to look for is "commuting to one place of work" This can catch people out and leave them technically uninsured if they commute to multiple sites. If the vehicle is a classic car or a camper van you might have the option of a limited mileage agreement that will reduce the cost of your cover but be wary of penalties if you exceed the agreed annual mileage. 
Telemetry - "Black Boxes" and accident witness cameras are increasing in popularity and helping to reduce premiums. There are some companies offering telemetry boxes for young drivers which is making premiums more affordable. 
Voluntary Excess - Every policy has a compulsory excess that is paid by the driver in the event of a claim. You can choose to pay more in the event of a claim with a voluntary excess which helps to reduce the premium. Don't be confused by the word voluntary, once you have agreed the amount it must be paid when making a claim!
Type of cover - A choice between third party (your insurance pays for the person you hit's vehicle), Third Party, Fire & Theft, as before but cover for your vehicle being stolen or burnt out and Fully Comprehensive which is all the above plus cover for damage you do to your own vehicle.  There are terms and conditions on all of these which are worth checking so if you've left your car running, unlocked with the windows down and it gets taken don't expect a payout!
Named Drivers -  Adding more drivers to a policy will increase the cost. There used to be a trend for older drivers to insure a vehicle in their name and add a young driver to give them a cheaper premium. This is called fronting and is illegal. The person taking out the policy must the main driver of the vehicle. 

Vehicle Factors

Type -  All cars are given an insurance group. The old system was 1 to 20 and was replaced in 2010 by a system that grades cars from 1 to 50. One being the cheapest, fifty being the most expensive. As with all things insurance these are ratings based on risk (performance, desirability/theft risk, vandal risk) and cost of repair. 
Security - Fitting extra security features can reduce your insurance. Alarms if not fitted by the manufacturer need to be Thatcham approved and professionally fitted with all receipts and documentation. GPS Trackers can also bring down the cost of your cover. 
Storage - Putting the vehicle in a locked garage overnight will make your insurance cheaper than leaving it out on the street. 
Modifications - Any parts fitted to the vehicle that differ from manufacturer's specification need to be declared. If you don't declare your modifications the best outcome is the insurer won't pay out when your expensive audio system gets stolen, the worst case is they void your insurance and refuse to pay out on any claim whether or not the modifications are involved. Don't get caught out with winter wheels! If you run your car on after market wheels with winter tyres during the bad weather it's highly advisable to inform your insurance company!
Imports & Classics - Some insurance companies will not cover imported vehicles and it may be more costly to insure an import car due to higher repair cost in the event of an accident. Classic cars, subject to driver age, are eligible for specialist classic car policies that can reduce premiums and bundle together useful features such as breakdown recovery and a agreed vehicle valuation.  

Here at Paint Perfect we are always on hand to give impartial advice on your car insurance issues and can guide you through the process of making a claim and discussing the options and the impact it may have on your premium. We undertake retail and insurance work for private customers and businesses from a bumper scuff to crash repairs. Our claims assistance team can take the stress out of making an insurance claim and our fleet of courtesy cars can get you back on the road as soon as possible. It's this service that sees many of our customers coming straight to our Clayton Road office in Lincoln for guidance before making an insurance claim. Call us on 01522 568247 or e-mail info@paintperfectlincoln.co.uk. You can find us at Unit 11 Clayton Road, Newark Road Industrial Estate, Lincoln. LN5 8RE