Saturday, March 16, 2013
Car insurance: the importance of history to the underwriter
How your past of driver influence the price of your insurance?
Auto insurance prices are not fixed arbitrarily. Indeed, many criteria are taken into account to determine rates. It is because of the diversity of these factors that the prices vary so much depending on the model of car that you and the person who assured him. Because all these criteria, the history of the driver is crucial.
How does history affect prices?
Indeed, the profile and the past of the insured are decisive in the fixing of the price of the insurance. For example, a driver who has his permit for 1 year, will be considered more at risk than a driver who owns his 15 years. This will result in an increase in the rates for the young driver.
But there is not that the basic price that is modified by the history. Prices can still evolve after the signing of the contract, particularly because of the bonus/malus. This system, imposed on all insurers, reward good behaviour and penalise bad. Specifically, every year, the insurer recalculates its tariffs for each of its policyholders depending on their behavior the previous 12 months. Thus, those who have been responsible for any accidents will receive a reduction on their premium. On the other hand, those who have been responsible for an accident will see their premiums increase.
The criteria which are not taken into account
However, it should not be thought that everything, absolutely everything, is taken into account by insurers. Some criteria are not always successful or even are never selected. For example, if the insurers have the right to increase the price for those who commit an excess of speed, all do not.
The criteria that are never taken into account, include also for no parking fines, which are not expected to be included in the dossier of the insured and shall not be taken into account by the insurance. Similarly, if it is necessary for the insured to declare the handicaps from which it suffers, whether they are visible or not, the insurer has however not entitled to retain this criterion to justify an increase of premium: this is perfectly illegal.
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