Have you ever wondered how insurers calculate your insurance premium? Although it may seem like they just pluck a figure from thin air, it’s actually quite a scientific process. It takes into account all the factors that may increase or reduce the likelihood of them having to pay a claim.
Insurers’ rates are calculated using all sorts of information, gathered over many years. This information is analysed by number crunchers know as ‘actuaries’, who set the rates that are used to calculate your premium.
The information you give us then influences these rates. So, what sort of thing are we talking about?
The driver of any vehicle will be one of the main factors insurers look at when working out the premium. For you, age will be the main factor. Insurers aren’t being unfair when they charge high premiums for young drivers – statistically, young drivers are more likely to have more accidents. This can be down to a lack of experience but did you know that the frontal lobe isn’t fully developed until you’re 25? This is the part of the brain that helps with hazard perception and decision making and that may also be a factor in the high proportion of accidents among young drivers, generally.
Your occupation will also have an effect on the premium. Some jobs are perceived to be more high risk than others, for example, someone who works in a bar may be driving late at night, which means that their car may be left in a high risk area at a time when it’s more likely to be stolen or damaged.
Where you live can also increase the premium. Those who live in areas with high theft rates will, unfortunately, have to pay more.
The car you drive will have a huge impact on your premium. More powerful cars cost more to insure, partly because they are more expensive to repair, but mainly because you are young and inexperienced. Being in charge of a powerful machine increases the risk of you having to make a claim. Newer cars can also be more expensive to insure, again because they are more expensive to repair. On the other hand, some newer cars have enhanced safety features and this could save you money.
Claims and Convictions
Your driving history is an important factor in working out what premium you will pay. If you’ve had accidents or claims, particularly if you were at fault, your premium will be likely to increase. Driving convictions will also give the insurers a picture of the sort of driver you are and this will probably lead to a higher premium or even an insurer refusing to cover you. However, if you’re reading this, then you’ve probably passed your test fairly recently so we hope that won’t be an issue!
Once you’ve been driving for a few years, you will start to build up a “No Claims Bonus”. This is a percentage discount which goes up for every year you’ve been driving, usually stopping at either 5 or 9 years. Once you have the maximum “bonus”, you can pay to protect it, which means that you can have a specified number of claims (usually 2) before the level of discount reduces. No Claims Bonus won’t stop your premium from increasing, though. It relates purely to the level of discount the insurer allows.
So, why choose Dash Hound?
When we developed this product, our primary aim was to save you money! Having the Dash Hound box installed allows both you and your insurers to monitor your driving habits. This means that changes can be made before it’s too late. We hope that this will make you a safer driver and reduce the likelihood of you having to make a claim.
With Dash Hound, you also have the added benefit of having an experienced insurance broker on your side. Insurance is our passion and we understand all the technicalities of it and will always strive to ensure that you have the cover that’s best for you. If you do need to make a claim, you won’t be on your own against a faceless, internet based company – you’ll have us on your side.
You won’t be with Dash Hound forever, so when it’s time to switch to a conventional insurance policy, we’ll be here to guide you.
Hopefully you’ve already entered our competition to win a Garmin Drive Smart Sat Nav. If not, there’s still time – click here for details.
Happy driving, from Dash Hound – the young driver’s best friend!