Car Insurance - who gets the best deal?
February, 06, 2008
How do they figure out car insurance? Well, I suppose you’d be forgiven for thinking a simple formula of (a) how pricey your cars is plus (b) your no claims plus (c) your post code = premium, right?
Er, no. Just about everything, apart from your shoe size, is assessed before a decision is made: Gender, age, exactly where you live, occupation, the car you drive, experience behind the wheel… all impact on how much your premium is.
SaveBorrowSpend gives you the breakdown of just who gets the best and worst deals. Just for fun, check and see if you resemble any of the characters we’ve made below:
Sarah is a 33 year old female bank manager who lives in a small rural village and drives 1.1 Ford Fiesta
Anna is a 55 year old antiques dealer living in a market town who drives a harmless little VW Polo
John, on the other hand, is a 45 year old surgeon, lives in Manchester and drives a racy Audi RS4
Dan is a twenty-something journalist, living in London, and drives a dodgy old Porsche 944 which is his pride and joy
Sorry to make the women sound more mundane but Sally will undoubtedly get the best deal, as women in their 30s are considered particularly safe drivers. Maybe it’s being surrounded by Ming vases or something, but antiques dealers are deemed less accident prone, so Anna’s wallet shouldn’t be too badly hit either. But Dan, being a young flash male will, of course, get stung for a massive premium, and John will fork out much more than the average, but hey he can afford the premiums can’t he?
Your job
Research into who presents the biggest risk to insurers even includes analysis into which professions are the most dangerous. This is not how risky your job is but how dangerous people with certain jobs are considered to be behind the wheel of a car.
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What the researchers tell the insurers is that doctors, lifeguards, athletes, entertainers, journalists and accountants are all deemed to be more accident prone, so they end up with higher premiums. (At least there’s a conversation starter for you with the next accountant you meet).
There’s good news if you are an actor, wine merchant, antique's dealer, teacher, bank manager or office worker; all of whom are deemed some of the safest drivers in the UK (Wine Merchants – Why? Please email us if you think you know info@saveborrowspend.co.uk).
Where you live?
Your full postcode is very important to insurance providers, as most crucially it means they can look at the crime rates in your area. It is simple - the more likely your car is to be stolen or broken into, the higher your premiums will be. And be prepared for a classic “computer says no” moment – as in a story a few years back about how Beefeaters who lived inside the Tower of London (a castle where, of course, armed guards protect the Crown Jewels) were hit by high insurance premiums because they lived in the high crime East London postcode of Tower Hamlets!
Your driving experience
Just passed your test? Points on your licence? Previous motoring convictions? Don’t be surprised if the insurers see you as more of a liability.
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Porsche versus Vauxhall Nova
Insurers rightly or wrongly assume that people in sports cars are likely to drive faster (the ‘how fast can this beauty go’ theory). Cars with bigger engines, modifications (you did tell your insurer about those new alloys, right?) or imported vehicles will incur heftier premiums. Also, when your Aston Martin gets a knock it obviously costs a lot more than my cheap-as-chips VW to put right.
Age & Gender
The myth, advocated by some men, that us girls are bad drivers, is just that, a myth. Research shows that women have fewer accidents: simple as that. Did you know a 21 year old man is one and half times more likely to make a claim than a woman of the same age? Political correctness has nothing to do with the financial bottom line for insurers!
Also you’d be mistaken for thinking the old person in the car ahead is a menace on the roads, older people are statistically safer too.
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The hard facts tell us that men are more of a hazard on the road, and the younger they are the more dangerous they are. The proliferation of specialist insurance companies catering specifically for older or female drivers is not by mistake. Of course, there are variables – men are more likely to drive for a living, for example. Nonetheless, insurers work on carefully calibrated risk.
It’s worth bearing in mind that this week the price comparison website moneysupermarket.com warned people not to be lulled into thinking specialist insurers will offer them the best deal. Their research revealed people often got a better premium with the mainstream insurance companies. They advise people to shop around (mind you considering their business, they would wouldn’t they!)
There is also a lifeline for young drivers, both male and female, with the Association of British Insurers saying this week that taking part in a ‘Pass Plus’ course could help them save on their insurance. Malcolm Tarling, ABI spokesman said “some companies now offer incentives for young drivers who have this qualification”.
In the end your insurance is based on a heady mix of variables, much of which you have absolutely no control over. The only real choice you really have is what car to drive (after all car insurance premiums are hardly reason alone to pack up and move from the city to the countryside).
So, do you really need that three litre four wheel drive to pick up the kids from school half a mile away? Carbon footprint aside, look at your insurance premiums!
SaveBorrowSpend Philippa Adam
