The strange world of insurance

[simonrockman]

I have an MX5 and a B-Max. The insurance on the B-max needed renewing so I called the insurer for the MX-5 and asked what they could do. They had the defaults from the MX-5 so less form filling, but since I took out the MX5 insurance I've had two speeding fines.
The quote for the B-Max was twice what I was expecting so I thanked them and said I'd be on my way.
They howver said they needed to update my MX-5 insurance with those two speeding fines. Which they did. The new rate was £211 *cheaper* so I got a refund for adding two fines.

I don't understand this.

[witko999]

You should probably get another speeding ticket in the interest of research.

[ThingsBehindTheSun]

My insurance is due to renew soon so I have been searching for quotes. It is worth shed money and I only do 3K miles a year so I decided to lower the value of the car to £500 (I am never going to claim anyway) and the mileage from 6K to 3K

The quote actually went up......

[StoutBench]

ThingsBehindTheSun said:

My insurance is due to renew soon so I have been searching for quotes. It is worth shed money and I only do 3K miles a year so I decided to lower the value of the car to £500 (I am never going to claim anyway) and the mileage from 6K to 3K

The quote actually went up......

It's a pretty known fact that too low a milage insurance goes up.

[Ry.Clarke]

I’ve got this coming up; I can’t wait!

My insurance was cheaper when I was at uni (and doing similar miles) to what it is now some 5 years later, it’s even the same car.

[STe_rsv4]

StoutBench said:

It's a pretty known fact that too low a milage insurance goes up.

for what reason may I ask?

[StoutBench]

STe_rsv4 said:

StoutBench said:

It's a pretty known fact that too low a milage insurance goes up.

for what reason may I ask?

Many different reasons, an insurer may choose one or more of the below or their own data. But it's pretty well known.

1. Less experience on the roads if you don't drive much
2. Vehicle is used for specific purposes in the case of an MX5 potentially spirited driving.
3. Short journeys, some claims stats show that people tend to have more accidents on shorter journeys.

Before everyone piles in with their amazing understanding of the insurance market. I'm not an insurer nor do I care that you disagree with any of the reasons above im just answering the question asked.

[STe_rsv4]

StoutBench said:

STe_rsv4 said:

StoutBench said:

It's a pretty known fact that too low a milage insurance goes up.

for what reason may I ask?

Many different reasons, an insurer may choose one or more of the below or their own data. But it's pretty well known.

1. Less experience on the roads if you don't drive much
2. Vehicle is used for specific purposes in the case of an MX5 potentially spirited driving.
3. Short journeys, some claims stats show that people tend to have more accidents on shorter journeys.

Before everyone piles in with their amazing understanding of the insurance market. I'm not an insurer nor do I care that you disagree with any of the reasons above im just answering the question asked.

Thanks for that, I generally didn't know that. I always tend to "under egg" the expected mileage I do when insuring my vehicles as I thought it may bring the cost down (as per the OP's post) - I may have to rethink this strategy at renewal time!

[Dingu]

STe_rsv4 said:

for what reason may I ask?

People driving minimally claim more.

In fact that answer applies to any question of x changed and price altered by +/- y is that claims statistics show a better or worse risk.

Contrary to popular belief it’s not a punishment for any points or non fault claims. Insurers don’t care that you’ve claimed, it’s all stats. If someone thought it was profitable to charge less for points or a claim then they would absolutely charge less and sweep up the business!

Edited by Dingu on Thursday 17th April 13:06

[Fast and Spurious]

Twigthewknderkid will be along soon to tell us we are all wrong and it's perfectly sensible.

[Truckosaurus]

Dingu said:

...
In fact that answer applies to any question of x changed and price altered by +/- y is that claims statistics show a better or worse risk. ...

Indeed. It is quite possible that people with 2x speeding fines will be driving extra carefully in future

[simonrockman]

Dingu said:

Contrary to popular belief it’s not a punishment for any points or non fault claims. Insurers don’t care that you’ve claimed, it’s all stats. If someone thought it was profitable to charge less for points or a claim then they would absolutely charge less and sweep up the business!

Edited by Dingu on Thursday 17th April 13:06

The figures are all based on statistics, not marketing. They look at the ROI. You can't market charging less for more points, so that's not the reason behind it. It may be that with 20mph zones, so many people have SP30 fines it is not considered and indication of risk.

[TwigtheWonderkid]

STe_rsv4 said:

StoutBench said:

It's a pretty known fact that too low a milage insurance goes up.

for what reason may I ask?

Dishonest people lie about their mileage because they think it'll mean lower premiums. 100 people saying they do 2000 miles might contain 20 liars. 100 people saying they do 6000 miles might contain 5 liars. Dishonest people claim more than honest people, default on their premiums more, also lie about other stuff like business use etc.

Bottom line is, if the 100 people saying they do 2000 miles cost the insurer more than the 100 doing 6000 miles, they will be charged more.

Re the discount for 2 speeding offences, I'm not even sure I believe that story. Given that in the UK, insurers are not allowed to alter the premium mid term for convictions picked up since renewal. They can't take them into account until the next renewal.

[VSKeith]

TwigtheWonderkid said:

Dishonest people lie about their mileage because they think it'll mean lower premiums. 100 people saying they do 2000 miles might contain 20 liars. 100 people saying they do 6000 miles might contain 5 liars. Dishonest people claim more than honest people, default on their premiums more, also lie about other stuff like business use etc.

Bottom line is, if the 100 people saying they do 2000 miles cost the insurer more than the 100 doing 6000 miles, they will be charged more.

Re the discount for 2 speeding offences, I'm not even sure I believe that story. Given that in the UK, insurers are not allowed to alter the premium mid term for convictions picked up since renewal. They can't take them into account until the next renewal.

Doesn't mean they won't try it though

[98elise]

STe_rsv4 said:

StoutBench said:

It's a pretty known fact that too low a milage insurance goes up.

for what reason may I ask?

Their stats show they pay out more for people/cars that do few miles per year. It's data rather than opinion driven.

It could be that it's actually other related factors skewing the data, like people that do few miles tend to be driving at higher risk times (school run etc), or maybe older people who's driving skills are declining.

[Pica-Pica]

98elise said:

STe_rsv4 said:

StoutBench said:

It's a pretty known fact that too low a milage insurance goes up.

for what reason may I ask?

Their stats show they pay out more for people/cars that do few miles per year. It's data rather than opinion driven.

It could be that it's actually other related factors skewing the data, like people that do few miles tend to be driving at higher risk times (school run etc), or maybe older people who's driving skills are declining.

Insurers rely on statistics, so they use correlation, not causation, which would require a much deeper study - then all our premiums would go up!

[ncjones]

It's always worth playing around with the genuine variables.

19 year old daughter just back from travelling, sorting the insurance out for her car it was exactly the same premium, with the same insurer, if I took their suggested excess of £1k or I reduced it to £300. It was only when I tried to go below £300 the premium started going up. Also cheaper for 5k miles than 4k miles (or lower).

[Beanie]

I added my personal plate to my car and got £50 refund. It makes zero sense!

[TwigtheWonderkid]

Beanie said:

I added my personal plate to my car and got £50 refund. It makes zero sense!

Why does that make zero sense, if their stats happen to show a reduction in claims costs for cars with a personal plate?

[Beanie]

I'm the same idiot, driving the same car, with the exact same details and profile

But I take your point