How Do Insurance Companies Calculate Car Insurance?

Author: Tom Jones
Source: articlemarketer.com

Before you buy a car you may like to find out an estimate of how much the insurance is going to cost you! Whilst new cars sold from show rooms may have the insurance banding readily available, if you buy a pre-used car privately this may not be the case!

In the UK insurance companies, brokers and comparison sites use the rating system to provide the correct level of insurance. The ratings are only used as a guide which classifies cars on a numerical system from 1 to 20. This enables the insurers to band car models as accurately as they can.

Basically the lower the number the lower the insurance will be, however the system does not include optional extras or personalised insurance cover. Therefore the banding for a basic model car may be group 3, whilst a 1.6i VTR will be group 7, a BMW series 3 basic model is in group 11 and an Aston martin will be group 20!

The group banding increases according to the engine size and performance of the car. Other factors which are taken into consideration by insurers on which they calculate the premium costs includes the level of security, the age and whether the car has been imported.

70% of the information used to determine which group or banding every private car registered in the UK is given, is provided by The Motor Insurance Repair Research Centre at Thatcham
Once the insurers have used this base-line or bench mark information they then look at the driver or drivers who will be included on the policy.

The first things they look at or ask is whether the driver has any driving ban convictions which are related to either speeding or drinking-drug driving. Any driver who has these convictions may find it difficult to find insurance once their driving ban has ended, as many insurers deem these people to be too great a risk. Those who do offer insurance will increase their premiums prices considerably in an attempt to off-set the potential risk.

The next aspect insurers look at is the number of claims the driver has made within the last five years. Those who have never made a claim will be offered generous no claims discounts, which can in many cases cut an insurance premium by more than half, which potentially means safe drivers are offered the least expensive insurance, even if the drive cars in a high banding.

The driver’s age and sex will also be included during the calculations. Male drivers will usually pay more for insurance than women, and young male drivers are hit hard by insurance costs as they are considered to be a greater risk than women of the same age.

Probably the best way to find insurance which provides you with the cover you require at an affordable cost is to compare car insurance quotes from as many different insurance companies as you can. Even if you are satisfied with your current insurer, re-applying rather than just paying the renewal quote can also save you money. One fundamental thing to do is let the insurers know that you are looking for the best deals, as such they will either offer to match or beat any like-for-like quote you are given by their competitors.

For more information when looking to compare car insurance go to http://www.swinton.co.uk/car/