Is it just me or is car insurance completely illogical?
Discussion
I've been getting quotes of £4-5000 for quite some while now. Me being 17 undoubtedly is what is causing these mad quotes. However, when I ran some quotes today I couldn't believe what I was seeing! All the small cars that people would normally recommend for 17 year olds such as Micras, Corsas and Lupos are over 6-7k to insure whereas they are normally 4-5k for me!
The really confusing bit is that all the nice cars can be insured for around 3k for me where I would normally get a quote of over 15k! I kept all the details the same as I always do and understand that insurance changes everyday, but come on, surely I shouldn't be getting a 7k quote for a Corsa, while I'm getting a 2.5k quote for a Accord 2.0/Vectra SRI/BMW 325i.
Can someone please explain car insurance to me and why I'm now getting ridiculous quotes on small cars and decent quotes for luxury cars/big cars.
The really confusing bit is that all the nice cars can be insured for around 3k for me where I would normally get a quote of over 15k! I kept all the details the same as I always do and understand that insurance changes everyday, but come on, surely I shouldn't be getting a 7k quote for a Corsa, while I'm getting a 2.5k quote for a Accord 2.0/Vectra SRI/BMW 325i.
Can someone please explain car insurance to me and why I'm now getting ridiculous quotes on small cars and decent quotes for luxury cars/big cars.
It does make sense if you think about it. The smaller cars tend to be driven by younger drivers, who are less experienced and have a higher tendency to crash. The larger/more luxurious cars tend to be driven by more experienced drivers and as such are involved in less crashes. Either way, your insurance is going to be expensive, due to your age alone. However, find something that is driven by those who are more experienced/older, and you should find it cheaper.
As marshalla said, it is all down to statistics.
As marshalla said, it is all down to statistics.
in this down and age to try and assess your insurance quote in terms of the car you're driving is a worthless exercise.
it's like those blokes at work who grumble about the quotes their teenage sons are getting and say stuff like "it's twice the value of the car"...don't get it, the real payouts aren't for the car, they're for injuries, so small cars with less safety features will probably cost more to insure.
it's not such a paradox as it first seems.
it's like those blokes at work who grumble about the quotes their teenage sons are getting and say stuff like "it's twice the value of the car"...don't get it, the real payouts aren't for the car, they're for injuries, so small cars with less safety features will probably cost more to insure.
it's not such a paradox as it first seems.
NadiR said:
I get what your saying, but surely a young driver is more likely to crash a straight 6 BMW then a 1.0 Lupo.
but there are fewer of them driving BMWs than small cars, so the overall statistical risk profile for the car is better.Consider - 100 Lupos, 90 of them driven by "youths" and 10 by over 50s. Let's say 10% of over 50s and 50% of youths crash - that means 46 cars out of 100 results in claims.
Now consider 100 BMWs, 90 of them driven by over 50s and 10 by youths. Same crash probabilities as before - that means 14 cars out of 100 result in claims.
So - 46% of Lupos result in claims, but only 14% of BMWs - then apply the age & experience weightings + a bit for difference in costs (mostly parts & write-off values).
^ Indeed. That is the "frequency" part of a Frequency-Severity model, how many claims...then multiply by the likely average cost. Ideally you want to do something mathematically horrible to work out the likely distribution, and then muck about with triangles...
Ultimately, it is down to cost. You pick your premiums to come in at say, 105% of claims+expenses. On the whole, 17 year olds driving BMWish BMWs don't cost insurers much in claims. Maybe they don't crash much, maybe they DO crash but don't do much damage to others when they do...who knows (well, the actuary does !).
Yes, some degree of "social engineering" obviously happens, but not to any great extent. If you are cheaper to insure in a 325 than a Corsa then so be it.
Maybe these are the more thoughtful type of teenager, like the OP, who looks around for less expensive cars to insure, rather than just going for what his mates think are cool. Maybe these people are "safer" drivers.
Another, fairly gruesome, possibility is that indeed teenagers with older BMWs DO crash a lot, but just end up killing themselves or their mate because of a) going faster b) less safety in older cars. Killing your teenage mate is a lot cheaper than paying for his care for the next 50 years.
The latter has some basis in truth, as whilst road deaths are down overall, they have been rising for your drivers, the suggestion being that they have been priced away from small but safe cars like a new Corsa into older cars.
Ultimately, it is down to cost. You pick your premiums to come in at say, 105% of claims+expenses. On the whole, 17 year olds driving BMWish BMWs don't cost insurers much in claims. Maybe they don't crash much, maybe they DO crash but don't do much damage to others when they do...who knows (well, the actuary does !).
Yes, some degree of "social engineering" obviously happens, but not to any great extent. If you are cheaper to insure in a 325 than a Corsa then so be it.
Maybe these are the more thoughtful type of teenager, like the OP, who looks around for less expensive cars to insure, rather than just going for what his mates think are cool. Maybe these people are "safer" drivers.
Another, fairly gruesome, possibility is that indeed teenagers with older BMWs DO crash a lot, but just end up killing themselves or their mate because of a) going faster b) less safety in older cars. Killing your teenage mate is a lot cheaper than paying for his care for the next 50 years.
The latter has some basis in truth, as whilst road deaths are down overall, they have been rising for your drivers, the suggestion being that they have been priced away from small but safe cars like a new Corsa into older cars.
Spreadsheets, yes 
The reality though, is that whilst the base data is fairly simple, the math to get you to the answer is more art than science. Actuaries don't really worry that the results of the model are odd, that leaving your car on the road is cheaper than locking it in a garage, or the TPF&T is more expensive than fully comp...you can't argue with a massive spreadsheet
The reality though, is that whilst the base data is fairly simple, the math to get you to the answer is more art than science. Actuaries don't really worry that the results of the model are odd, that leaving your car on the road is cheaper than locking it in a garage, or the TPF&T is more expensive than fully comp...you can't argue with a massive spreadsheet
NadiR said:
I get what your saying, but surely a young driver is more likely to crash a straight 6 BMW then a 1.0 Lupo.
Possibly but if of 1000 young drivers 800 buy standard "first cars" and 50% crash that is 400 if the other 200 spread themselves over Grandad specials and classics then even if 50% crash that's 100 so the stats can look better specially if the ones who chose grandad specials are more sensible and thoughtful as illustrated by their car choice.marshalla said:
NadiR said:
I get what your saying, but surely a young driver is more likely to crash a straight 6 BMW then a 1.0 Lupo.
but there are fewer of them driving BMWs than small cars, so the overall statistical risk profile for the car is better.Consider - 100 Lupos, 90 of them driven by "youths" and 10 by over 50s. Let's say 10% of over 50s and 50% of youths crash - that means 46 cars out of 100 results in claims.
Now consider 100 BMWs, 90 of them driven by over 50s and 10 by youths. Same crash probabilities as before - that means 14 cars out of 100 result in claims.
So - 46% of Lupos result in claims, but only 14% of BMWs - then apply the age & experience weightings + a bit for difference in costs (mostly parts & write-off values).
The crash frequency of a model in the hands of an oap is irrelevant in pricing insurance for a 17 year-old.
Cars don't crash. People do. People with different cars crash differently.
Engineer1 said:
NadiR said:
I get what your saying, but surely a young driver is more likely to crash a straight 6 BMW then a 1.0 Lupo.
Possibly but if of 1000 young drivers 800 buy standard "first cars" and 50% crash that is 400 if the other 200 spread themselves over Grandad specials and classics then even if 50% crash that's 100 so the stats can look better specially if the ones who chose grandad specials are more sensible and thoughtful as illustrated by their car choice.BarnatosGhost said:
marshalla said:
NadiR said:
I get what your saying, but surely a young driver is more likely to crash a straight 6 BMW then a 1.0 Lupo.
but there are fewer of them driving BMWs than small cars, so the overall statistical risk profile for the car is better.Consider - 100 Lupos, 90 of them driven by "youths" and 10 by over 50s. Let's say 10% of over 50s and 50% of youths crash - that means 46 cars out of 100 results in claims.
Now consider 100 BMWs, 90 of them driven by over 50s and 10 by youths. Same crash probabilities as before - that means 14 cars out of 100 result in claims.
So - 46% of Lupos result in claims, but only 14% of BMWs - then apply the age & experience weightings + a bit for difference in costs (mostly parts & write-off values).
The crash frequency of a model in the hands of an oap is irrelevant in pricing insurance for a 17 year-old.
Cars don't crash. People do. People with different cars crash differently.
Using the above logic the BMW would again be cheaper, but I don't think this is the case.
madbadger said:
To turn it on its head would an older person expect to get a higher quote on a lupo or on a BMW?
Using the above logic the BMW would again be cheaper, but I don't think this is the case.
It could be - it depends on the population that the insurer in question is dealing with. That's the point, though, the price is determined by the risk profile of the particular car/driver/other factors combination when measured against the statistical model derived from the total population, not calculated in isolation. If incidents involving Lupos tend to result in more expensive claims (e.g. because of more instances of whiplash, injury or death) then the premium on them can be higher than on the BMW because they profile as a higher risk vehicle. My example was, necessarily, simplistic though - it ignored most of the other factors which are used to create the profile, but the basic model behind it is right - it's all down to the insurer's past experience of the population insured and how that populations is subdivided.Using the above logic the BMW would again be cheaper, but I don't think this is the case.
The net effect, in the example, was that "youths" were high risk and Lupos were high risk so a youth+Lupo combination attracted a high premium. BMWs however were lower risk (fewer incidents) so a youth + BMW combination was a lower premium than the youth+Lupo. (which is what the OP discovered).
Similarly, older drivers were lower risk so oldie+Lupo would be lower premium and oldie+BMW would be low too. Now, if the insurer chooses to use the difference in crash rates within the Lupo population (highly likely that they will) it may well turn out that oldie+Lupo is the lowest premium of the lot, but if they don't oldie+BMW may win.
NCBs represent an element of personal risk profile, btw.
Edited by marshalla on Saturday 25th February 16:12
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