Check My Car Insurance!

Check My Car Insurance!

First of all, when did car insurance start?

Widespread use of the automobile began after the First World War in urban areas.  Cars were relatively fast and dangerous by that stage, yet there was still no compulsory form of car insurance anywhere in the world.  This meant that injured victims would seldom get any compensation in an accident, and drivers often faced considerable costs for damage to their car and property.

A compulsory car insurance scheme was first introduced in the United Kingdom with the Road Traffic Act 1930.  This ensured that all vehicle owners and drivers had to be insured for their liability for injury or death to third parties whilst their vehicle was being used on a public road.  Germany enacted similar legislation in 1939.

A wrecked vehicle in Copenhagen

Auto insurance protects the policyholder against financial loss in the event of an incident involving a vehicle they own, such as in a traffic collision.

Coverage typically includes:  Property
coverage, for damage to or theft of the car.

Liability coverage:  this is the legal responsibility to others for bodily injury or property damage.
Medical coverage:  for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.
No-fault insurance:  is a type of insurance policy (typically automobile insurance) where insureds are indemnified by their own insurer regardless of fault in the incident.

Every country has different regulations for automobile insurance.  The medical coverage portion also differs in all countries.  For example:

United States

The regulations for vehicle insurance differ with each of the 50 US states and other territories, with each U.S. state having its own mandatory minimum coverage requirements.  Each of the 50 U.S. states and the District of Columbia requires drivers to have insurance coverage for both bodily injury and property damage, but the minimum amount of coverage required by law varies by state.

For example, minimum bodily injury liability coverage requirements range from $20,000 in Florida to $100,000 in Alaska and Maine, while minimum property damage liability requirements range from $5,000 (four states) to $25,000 (16 states).  So the insurance company that you deal with will be able to let you know the regulations where you live.

Different policies specify the circumstances under which each item is covered.  For example, a vehicle can be insured against theft, fire damage, or accident damage independently.

If a vehicle is declared a total loss and the vehicle’s market value is less than the amount that is still owed to the bank that is financing the vehicle, GAP insurance may cover the difference.  Not all auto insurance policies include GAP insurance. GAP insurance is often offered by the finance company at time the vehicle is purchased.

 To reduce the insurance premium

The insured party may offer to pay a higher excess (deductible) than the compulsory excess demanded by the insurance company.  The voluntary excess is the extra amount, over and above the compulsory excess, that is agreed to be paid in the event of a claim on the policy.  As a bigger excess reduces the financial risk carried by the insurer, the insurer is able to offer a significantly lower premium.

Depending on the jurisdiction, the insurance premium can be either mandated by the government or determined by the insurance company, in accordance with a framework of regulations set by the government.  Often, the insurer will have more freedom to set the price on physical damage coverages than on mandatory liability coverages.

When the premium is not mandated by the government, it is usually derived from the calculations of an actuary, based on statistical data.  The premium can vary depending on many factors that are believed to affect the expected cost of future claims.  Those factors can include the car characteristics, the coverage selected (deductible, limit, covered perils), the profile of the driver (age, gender, driving history) and the usage of the car (commute to work or not, predicted annual distance driven)

So, there are a lot of variables that have to be considered the insurer and also the insurance company.  That is why you shouldn’t take the first offer.  It is always good to shop around.

There are many factors that will determine the cost of your automobile insurance policy.  Some are listed below:

Gender

Because male drivers, especially younger ones, are on average often regarded

as tending to be more aggressive, the premiums charged for policies on vehicles whose primary driver is male are often higher.  This discrimination may be dropped if the driver is past a certain age.

Age

Teenage drivers who have no driving record will have higher car insurance premiums.  However, young drivers are often offered discounts if they undertake further driver training on recognized courses, such as the Pass Plus scheme in the UK.  In the US many insurers offer a good-grade discount to students with a good academic record and resident-student discounts to those who live away from home.  Generally insurance premiums tend to become lower at the age of 25.  Some insurance companies offer “stand alone” car insurance policies specifically for teenagers with lower premiums. By placing restrictions on teenagers’ driving (forbidding driving after dark, or giving rides to other teens, for example), these companies effectively reduce their risk.

Senior drivers are often eligible for retirement discounts, reflecting the lower average miles driven by this age group.  However, rates may increase for senior drivers after age 65, due to increased risk associated with much older drivers.  Typically, the increased risk for drivers over 65 years of age is associated with slower reflexes, reaction times, and being more injury-prone.  Many times insurance companies will even want seniors to take a test after they reach a certain age or if they have accidents.

U.S. Driving History

In most U.S. states, moving violations, including running red lights and speeding, assess points on a driver’s driving record.  Since more points indicate an increased risk of future violations, insurance companies periodically review drivers’ records, and may raise premiums accordingly. Rating practices, such as debit for a poor driving history, are not dictated by law.  Many insurers allow one moving violation every three to five years before increasing premiums this is called accident forgiveness.  Accidents affect insurance premiums similarly. Depending on the severity of the accident and the number of points assessed, rates can increase by as much as twenty to thirty percent.  Any motoring convictions should be disclosed to insurers, as the driver is assessed by risk from prior experiences while driving on the road.

Marital Status

Statistics show that married drivers average fewer accidents than the rest of the population so policy owners who are married often receive lower premiums than single persons.

Profession

The profession of the driver may be used as a factor to determine premiums. Certain professions may be deemed more likely to result in damages if they regularly involve more travel or the carrying of expensive equipment or stock or if they are predominant either among women or among men.

Vehicle Classification

Two of the most important factors that go into determining the underwriting risk on motorized vehicles are: performance capability and retail cost.  The most commonly available providers of auto insurance have underwriting restrictions against vehicles that are either designed to be capable of higher speeds and performance levels, or vehicles that retail above a certain dollar amount.  Vehicles that are commonly considered luxury automobiles usually carry more expensive physical damage premiums because they are more expensive to replace.  Vehicles that can be classified as high performance autos will carry higher premiums generally because there is greater opportunity for risky driving behavior.

Motorcycle Insurance may carry lower property-damage premiums because the risk of damage to other vehicles is minimal, yet have higher liability or personal-injury premiums, because motorcycle riders face different physical risks while on the road.  Risk classification on automobiles also takes into account the statistical analysis of reported theft, accidents, and mechanical malfunction on every given year, make, and model of auto.

Distance

Some car insurance plans do not differentiate in regard to how much the car is used.  There are however low-mileage discounts offered by some insurance providers.  Other methods of differentiation would include: over-road distance between the ordinary residence of a subject and their ordinary, daily destinations and also if it is only to and from work.

I would like to hear your comments and any experiences in your search for vehicle insurance. Please send me an email.

bobby@insuranceforu.net

Thank you,

Bobby