Car insurance quotes depend upon a multitude of options and information specific to the policy holder and other drivers who are authorised to drive the vehicle being insured. Since every vehicle that is parked or driven on public roads has by law to have insurance and the authorities have many means to enforce this, the car industry is obviously huge and given the wide range of risks they are covering, their systems are therefore both sophisticated and thus complex.
This allows them to rapidly and accurately offer competitive rates to potential customers, even though they have to take into account a large number of complex factors.
That this process works so well can be judged by the large number of quotes a customer can retrieve from the price comparison websites at the push of a button.
The provision of a quote, although rapid does however require the potential customer to input a large amount of information.
This is despite the fact that a the vehicle information can usually be identified in countries such as the UK by the licence plate information alone, as the electronic databases for the vehicles are available to the insurance companies.
This eliminates the need for owners to try and remember complex details about engine sizes etc when requesting an insurance quote. Instead the user has to enter much more detailed personal information about themselves and their driving history.
The insurance company obviously wishes to offer the best possible quote to secure the business but it has to weigh the specific risks of each customer against the driving history of other similar customers.
A word of warning here is appropriate, whilst it is fine to portray your personal circumstances and driving history in the best possible light to get the best quote, insurance companies despite being competitors do share information about customers.
The quotation system thus will generate a higher premium for a new or provisional licence holder driver, particularly if they are also young.
Why, because the lack of experience and the history of their peers, suggests they are more likely to have an accident. In addition they will have far less background in terms of financial stability.
One useful tip here is that although it might seem that adding other drivers to a policy would increase the risks, this may not always be the case. For example, some younger drivers report that they have received lower quotations by adding their mother to the policy as it is presumable assumed that at least for some of the time the vehicle will be used by a “safer” driver.
In some countries such as the US, insurance companies will cover the household and they then take a view of all of the potential drivers and their history.
This does not happen in the UK where the policy is vehicle specific, although in some limited case, usually for more experienced drivers, their policy will allow them to legally drive other vehicles.
Another word of warning here, in such cases, the cover is restricted to third party risks and if they have an accident then any damage to the vehicle they are driving is uninsured.
It may come as s surprise that the quotation value varies by so much, even before taking account of discounts such as no-claims bonuses.
A powerful new vehicle costing say $40,000 and driven by someone with a good professional job and a long claim free driving record, living in a neighbourhood where the risk of theft is low, might have a net cost of between $400 to $500 per year.
By contrast a young driver might even be refused a quote for the same vehicle or be offered cover at maybe ten times or more this figure! Not all insurance companies offer the same benefits in their quotations and it is necessary to read the small print and at the very minimum understand what is included.
Although there are three main categories of insurance, comprehensive, third party fire and theft and third party only, there are many other elements of policies which influence the value you are getting for the price you pay. Key things to check are what happens in the case of a claim.
How much of it will you have to pay and how will it affect the cost next year, what support will you get, what medical bills will be covered if there are injuries, where can you drive the vehicle, if you plan to drive in different states or countries.
The internet allows the customer to search for alternative companies and compare the policy options far more effectively than was possible in the past where brokers decided what they thought you needed and were of course mindful of their commissions!
As noted above, price comparison sites, can take a lot of the hard work out of the process but some companies do refuse to quote on these so you might be missing the best deal unless you contact them directly.
Key factors in reducing the price of your car insurance quotation is when purchasing the vehicle, consider whether you need all the power of the vehicle and if you think you are a good driver accept a higher level of deductible (excess) that you will have to pay in the event of a claim against your policy.
Note that in most cases if it is the other driver’s fault this will not be payable. The insurance company’s logic for a significant deduction here is quite simple, if you are prepared to share the risk with them, then you are probably going to drive more safely!
Also, think about whether you need fully comprehensive insurance, if your car was written off in an accident, would it not be cheaper to accept the risk that you have to buy a new one rather than pay much higher insurance premiums every year?