The Science Behind Varied Insurance Rates for Different Cars
The cost of vehicle insurance varies considerably between one vehicle and another. (On average, if you were to insure a works of art, it would cost £40,000.) Obviously, this is not an exact science. There are many different reasons for these differences. But if you understand some of the underlying principles, you can make an informed decision when buying a car and choosing an insurance policy. In this article, we map out some of the science underlying the discrepancies between levels of insurance on different types of car.
Safety features and crash test ratings: One of the biggest factors in determining insurance rates is the vehicle’s safety features and the vehicle’s performance in crash tests. The safer a car is, the lower the insurance premium because there is less risk that the vehicle will be involved in an accident. This]) are less expensive to insure.
Repair Costs and Vulnerability: Some cars are likely to cost more to repair than others, either due to their susceptibility to damage – perhaps because of the materials used in the car’s construction – or their repair costs. Again, luxury and high-performance cars would fall into this category: they are often built with specialised parts and complex technology, increasing their overall repair costs and therefore leading insurers to charge higher premiums.
Theft Statistics: Vehicle theft frequency is another factor that weighs into insurance rates. If a car is more likely to be stolen and/or broken into, it will usually cost more to insure. Insurers use historical and current theft data, and assessments from organisations such as the Motor Insurance Repair Research Centre, to rate the risk associated with different vehicles. A car with adequate anti-theft features and low theft frequency is likely to carry a lower insurance premium.
Vehicle Performance and Horsepower: Cars with powerful engines, also known as high-performance vehicles, typically require higher premiums as they’re more expensive to insure. These vehicles may be more challenging to drive and can lead to more accidents, especially with inexperienced or reckless drivers. When determining a vehicle’s risk, it is common for insurance companies to consider factors such as performance, like horsepower and acceleration, and the top speed.
Demographics of the driver: While the car is an important factor to consider, premiums could come with more cost, depending on certain personal information of the driver. Young and new drivers are usually more expensive to cover as they statistically tend to be involved in more accidents. It too, comes down to location. An area with a high number of accidents or crime statistics naturally translates to a higher cost in premiums.
Factors such as claims frequency and claims severity are taken into account: insurers assess how many accidents and how much a particular car model was involved in over time. More accidents and/or greater payouts, more risk, and thus higher premium.
To sum up, the factors that affect totaled car insurance rate includes vehicle safety feature, crash test rating, suspending repair cost, forced theft information, vehicle performance, customer demographic and lastly history claim data. As a car buyer who plan to buy or rented car, once you get better knowledge to understand how these factors affects the insurance coverage and their cost. This shall start to influence your decision on selecting the new vehicle variety and which insurance coverage that suits the best for the purpose and meet your budget in having the right vehicle that covers the maximum price to pay.
