How does your age affect your premium?
As many UK motorists are aware there are a range of factors which come into play when companies decide the rate premium you pay. The first step of this process, at the application stage is to take all your details – which the company will do with a paper based form or over the internet.
This will ask a range of questions, some of which you may expect – such as contact details, some of which you may not expect for example asking if you are a smoker or not. All of these details go into the companies computers and they come to a risk assessment. The risk assessment is a principal upon which all insurance is based, with many complex calculations made.
At the heart of the car insurance, the risk decision basically determines if the company thinks they will be likely to pay out in compensation or not. Obviously the companies cannot pay out without having money in reserve and the way they collect this reserve and build it up is to charge a premium for the service to anyone taking out cover – it is basically a service charge. To cover themselves for having to pay out members, the more likely a person is to need a payout, the higher the premiums will be. It is a fair system, which has been employed for years and years. The likelihood, or risk assessment depends many factors for example:
Age - the younger a driver is, the less time they will have had to build up an acceptable record or history of safe driving. Therefore they cannot use such a history to prove to insurers they are unlikely to need to make a claim. Therefore they are seen as a higher risk than someone who can demonstrate they have been driving for years and years without a crash / claim. A higher risk is a higher car insurance premium.
Equally much older drivers at the other end of the spectrum also have a higher risk to the car insurance company. It is proven and widely accepted that a late aged individuals can have slower reaction times, thus being less able in reacting to avoid a collision for example. They also have declines in eyesight, which, as you can imagine if you are unable to see an obstacle for example, could cause an accident or crash. It is for this reason that older motorists can attract higher premiums too.
Tags: risk, young person car insurance, Disaster Accident, paper, system, service, assessment, claim