Can anyone explain the mad insurance prices?
Discussion
ED209 said:
98elise said:
NooBish AbbZ said:
i agree with the bike and car insurance, car last year was over £1000 although no NCB, bike this year £200, but 4NCB. Car has only 19 bhp more than the car..
Why is insurance for too expensive in general though? Simple. Legal requirement. Pricks.
Insurance on my car is £160 per year, so less than £15 per month. For the price of 3 pints of beer a company will indemnify me (and another driver) from anything I do in a 2 ton vehicle, and any costs I may incur no matter how expensive.Why is insurance for too expensive in general though? Simple. Legal requirement. Pricks.
That seems like a bargain to me.
It always amazes me that unlike almost any other insurance I know the cars value does not impact significantly on the premium.
When I do a 'go compare' on my aging Mkiv Supra it's in the £300-400 range and at the time was worth about £5K. ISF, Nissan GTR, 911 Turbo in the £25-40K range and a very similar premium. I'm aware of the various factors and the fact my own car may only be a part of a claim but I still don't see how a car up to 10 times the right off value can't attract a higher premium.
When I do a 'go compare' on my aging Mkiv Supra it's in the £300-400 range and at the time was worth about £5K. ISF, Nissan GTR, 911 Turbo in the £25-40K range and a very similar premium. I'm aware of the various factors and the fact my own car may only be a part of a claim but I still don't see how a car up to 10 times the right off value can't attract a higher premium.
Scootersp said:
It always amazes me that unlike almost any other insurance I know the cars value does not impact significantly on the premium.
When I do a 'go compare' on my aging Mkiv Supra it's in the £300-400 range and at the time was worth about £5K. ISF, Nissan GTR, 911 Turbo in the £25-40K range and a very similar premium. I'm aware of the various factors and the fact my own car may only be a part of a claim but I still don't see how a car up to 10 times the right off value can't attract a higher premium.
Largest claim (so far, to my knowledge) is in the region of £22m - whether a car is £500 or £50,000 is a drop in the ocean.When I do a 'go compare' on my aging Mkiv Supra it's in the £300-400 range and at the time was worth about £5K. ISF, Nissan GTR, 911 Turbo in the £25-40K range and a very similar premium. I'm aware of the various factors and the fact my own car may only be a part of a claim but I still don't see how a car up to 10 times the right off value can't attract a higher premium.
There is also the factor that someone is more likely to take better care of a £50,000 car than a £500 car and therefore less likely to crash. Bits are also less likely to fall off or otherwise fail on a £50k car which might (although I imagine it's rare) contribute to a crash.
I just wanted to test this again on a run of the mill car. My go compare quotes
Peugeot 308 £20K 1.6 Diesel new/nearly new £250
Peugeot 306 £1K 1.9TD ancient £220
£30 under 15% loading seems low considering within a year a write off on that 308 will cost the insurance company (on most policies) the full new replacement cost. Even with a large £500 excess there are many many knocks it could have that will cost the insurance company. Any isolated incident in the 306 (ie not other party involved) and the insurance company won't pay much if at all (the owner is unlikely to claim for a few hundred quid and lose no claims, same with theft, so it only leaves damage to others which can't be that different a risk to the newer car can it?
I spose it's because nearly all claims are settled knock for knock?
Peugeot 308 £20K 1.6 Diesel new/nearly new £250
Peugeot 306 £1K 1.9TD ancient £220
£30 under 15% loading seems low considering within a year a write off on that 308 will cost the insurance company (on most policies) the full new replacement cost. Even with a large £500 excess there are many many knocks it could have that will cost the insurance company. Any isolated incident in the 306 (ie not other party involved) and the insurance company won't pay much if at all (the owner is unlikely to claim for a few hundred quid and lose no claims, same with theft, so it only leaves damage to others which can't be that different a risk to the newer car can it?
I spose it's because nearly all claims are settled knock for knock?
What baffles me is that a week or so ago I was thinking of getting a Clio Trophy. Checked out insurance and it was less than what I am being quoted on the Aygo! The Aygo is the slowest and most boring car I've bought since my first car when I was at uni a long time ago (1 litre Micra) and I thought that one compensation would be really cheap insurance.
Esceptico said:
What baffles me is that a week or so ago I was thinking of getting a Clio Trophy. Checked out insurance and it was less than what I am being quoted on the Aygo! The Aygo is the slowest and most boring car I've bought since my first car when I was at uni a long time ago (1 litre Micra) and I thought that one compensation would be really cheap insurance.
Insurance companies gather all the stats they can find in order to calculate the various rates. Aygos are (probably) driven more often by young drivers who crash a lot - lots of data to draw upon. Aygos are less often driven by older drivers who crash less - less data to draw upon. Partly the figures will look like Aygo drivers crash a lot, and also the mature Aygo driver is a less well known quantity.Echoing a lot of the above, you can test it by looking at varying trims of the same model with similar/same performance but different target market.
I had a Vectra in the old-man sport-spec. Same engine as the VXR (remapped to same BHP), same suspension set-up, different gearbox (auto vs manual) and exhaust (two large, hidden outlets). But, one was targeted at retired pipe-smoking sales reps to tow their caravan, the other was targeted at people who wear sportswear when not doing sports.
Insurance was about half the VXR (£250 vs £500).
I had a Vectra in the old-man sport-spec. Same engine as the VXR (remapped to same BHP), same suspension set-up, different gearbox (auto vs manual) and exhaust (two large, hidden outlets). But, one was targeted at retired pipe-smoking sales reps to tow their caravan, the other was targeted at people who wear sportswear when not doing sports.
Insurance was about half the VXR (£250 vs £500).
Scootersp said:
xRIEx said:
Largest claim (so far, to my knowledge) is in the region of £22m - whether a car is £500 or £50,000 is a drop in the ocean.
Well it is in that case! but not in the vast majority of cases of general run of the mill accidents, with 'x' thousands in claims?Insurers know what claims are likely to happen on £500 cars and what claims are likely to happen on £50,000 cars - if they don't want one type of business they will price themselves higher. A large number of very low value claims is going to cost a lot (in %age terms) in terms of claims handlers/admin costs.
xRIEx said:
You're right, motor incidents tend to follow an inverse frequency/severity curve (a high frequency of low severity incidents, a low frequency of high severity incidents) - insurers know all this, they "know" how much they are going to pay out, they know how much they need to cover those claims, their underwriting costs, their claims admin costs, their reinsurance costs, their returns from investment income, etc. etc.
Insurers know what claims are likely to happen on £500 cars and what claims are likely to happen on £50,000 cars - if they don't want one type of business they will price themselves higher. A large number of very low value claims is going to cost a lot (in %age terms) in terms of claims handlers/admin costs.
I accept they know what they are doing or compensate in later years if they do mess up etc, it's just surprising to me how little effect the value has. House insurance for example and I'd expect a higher value house in the same street/area ie same flood/theft risks to have a higher insurance premium and perhaps not far off pro rata. Same with say a valuable painting. So what I'm saying is it surprises me the third party risk ie all the other bits that are covered excluding your car is so expensive compared to the part insuring your actual asset.Insurers know what claims are likely to happen on £500 cars and what claims are likely to happen on £50,000 cars - if they don't want one type of business they will price themselves higher. A large number of very low value claims is going to cost a lot (in %age terms) in terms of claims handlers/admin costs.
It's not a go at the industry I'm happy with my premiums its just that its hard personally to see that if I went from my powerful but cheap old import to say a new Nissan GTR that I'd be any more or less likely to have an accident, but if I did go on to have one I would be expecting a much larger cheque from my insurers!
Scootersp said:
xRIEx said:
You're right, motor incidents tend to follow an inverse frequency/severity curve (a high frequency of low severity incidents, a low frequency of high severity incidents) - insurers know all this, they "know" how much they are going to pay out, they know how much they need to cover those claims, their underwriting costs, their claims admin costs, their reinsurance costs, their returns from investment income, etc. etc.
Insurers know what claims are likely to happen on £500 cars and what claims are likely to happen on £50,000 cars - if they don't want one type of business they will price themselves higher. A large number of very low value claims is going to cost a lot (in %age terms) in terms of claims handlers/admin costs.
I accept they know what they are doing or compensate in later years if they do mess up etc, it's just surprising to me how little effect the value has. House insurance for example and I'd expect a higher value house in the same street/area ie same flood/theft risks to have a higher insurance premium and perhaps not far off pro rata. Same with say a valuable painting. So what I'm saying is it surprises me the third party risk ie all the other bits that are covered excluding your car is so expensive compared to the part insuring your actual asset.Insurers know what claims are likely to happen on £500 cars and what claims are likely to happen on £50,000 cars - if they don't want one type of business they will price themselves higher. A large number of very low value claims is going to cost a lot (in %age terms) in terms of claims handlers/admin costs.
It's not a go at the industry I'm happy with my premiums its just that its hard personally to see that if I went from my powerful but cheap old import to say a new Nissan GTR that I'd be any more or less likely to have an accident, but if I did go on to have one I would be expecting a much larger cheque from my insurers!
Third party risks are an unknown quantity, and by far the biggest risk - first off, third party property damage: an insurer does not know how expensive the car you're going to hit, is - it could be £200k or more. Additional to that, you may hit (or be the initial cause of damage to) more than one car, so even if we're not talking about one £200k car, you could hit 6 £30k cars and cause similar damage (highly unlikely, but you know what I mean).
Personal injury eclipses property damage - worst case scenario, you hit Simon Cowell's car and he is so badly injured he needs 24/7 nursing care for the rest of his natural life - already hundreds of thousands if not millions of pounds. Now, can you imagine the loss of earnings claim?
Compensation for cuts and bruises can be a few thousand (I've seen claims around £5k with this sort of description, but not the specific details of the injuries, but they are minor in the grand scheme of things) - if you've got three passengers in your car and collide with another car with four occupants, all suffering "cuts and bruises" then this could be £35k.
Liability claims are going to be by far the highest proportion of motor incidents.
Scootersp said:
xRIEx said:
You're right, motor incidents tend to follow an inverse frequency/severity curve (a high frequency of low severity incidents, a low frequency of high severity incidents) - insurers know all this, they "know" how much they are going to pay out, they know how much they need to cover those claims, their underwriting costs, their claims admin costs, their reinsurance costs, their returns from investment income, etc. etc.
Insurers know what claims are likely to happen on £500 cars and what claims are likely to happen on £50,000 cars - if they don't want one type of business they will price themselves higher. A large number of very low value claims is going to cost a lot (in %age terms) in terms of claims handlers/admin costs.
I accept they know what they are doing or compensate in later years if they do mess up etc, it's just surprising to me how little effect the value has. House insurance for example and I'd expect a higher value house in the same street/area ie same flood/theft risks to have a higher insurance premium and perhaps not far off pro rata. Same with say a valuable painting. So what I'm saying is it surprises me the third party risk ie all the other bits that are covered excluding your car is so expensive compared to the part insuring your actual asset.Insurers know what claims are likely to happen on £500 cars and what claims are likely to happen on £50,000 cars - if they don't want one type of business they will price themselves higher. A large number of very low value claims is going to cost a lot (in %age terms) in terms of claims handlers/admin costs.
It's not a go at the industry I'm happy with my premiums its just that its hard personally to see that if I went from my powerful but cheap old import to say a new Nissan GTR that I'd be any more or less likely to have an accident, but if I did go on to have one I would be expecting a much larger cheque from my insurers!
t how much your car cost to buy, they only care how much they end up paying out. It might seem odd that an expensive car is relatively cheap to insure, however that just means they don't end up payong out more for that type of car. A house is a different matter, its very unlikely to crash into another house, so the losses are going to be relative to its value (cost to rebuild actually)
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