|

How Do Car insurance Companies Assess Risk?

Car insurance companies roll out different plans for different car and driver segments. These plans depend on the factors that affect the car insurance premium and are targeted at a certain segment of the consumers.

For example, if you visit a car insurance supermarket website, you will find that there is a whole segment dedicated to new drivers. Now why is there a whole segment for new drivers and why is it that the Car insurance companies consider the new driver car insurance premiums to be segregated from the mainstream insurance deals. The answer lies in the fact that the insurance premiums for new drivers is much more than the insurance premium for the seasoned ones.

This is because of a lot of reasons. These reasons in turn lie in the factors that govern the insurance premiums. In case of new drivers, the Car insurance companies do not have any information of the driving record and hence they cannot assess the risk element involved in insuring the driver. This is why the insurance premium amount is also high. Compare Direct Line car insurance and see how much you could save off your premium.

But this is not the only reason why it is so. Most of the new drivers are young in age and hence they are considered to be high risk elements by Car insurance companies. The insurance companies cite the statistical analysis of yearly traffic infringements and accidents as the reason. These statistics show that most of the traffic infringements are done by new and young drivers.

Driving a new vehicle tends to make them more enthusiastic and hence careless which leads to speeding or any other incident that can result in damage to the vehicle. This means that the chances of such drivers filing for claims are higher and hence the risk of insuring younger drivers is high. This becomes another reason for the rise in the insurance premium and because of the stark difference in the premium amounts for seasoned drivers and the new ones, the insurance companies have created and entirely new segment of plans for new drivers where provisions like ‘defensive driving courses’ are offered to help bring the insurance premium amounts down. This gives an overview of how the insurance companies work.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *