Everyone who owns a motor vehicle in the UK has to carry motor vehicle insurance. Motor trade insurance companies in the UK offer four different type of motor insurance. Very briefly, these four types of motor insurance that a vehicle owner can hold are: act only, third party, third party with fire and theft, and comprehensive.
The way motor trade insurance companies work out insurance is first, by the type of vehicle that is to be insured. Motor trade insurance companies have categorised every vehicle type, from a simple moped to heavy earth moving vehicles and ambulances.
Motor traders carry a different type of insurance. The insurance depends on the motor trade they are in. A motor trader could be a fleet owner, a showroom or a motor repair workshop.
When calculating the premium to charge, the insurance company will consider the following factors. What is the car type, who will be driving it, for what purpose the car will be used and the area where the car will be kept. Cars are grouped into twenty car types, and the higher the group, the more will be the insurance premium.
Information regarding the drivers also affects the insurance premium. Men under the age of twenty five are charged higher premiums. On the contrary, women in the same age bracket are charged a lower premium. Statistics in the UK show that more young men are responsible for accidents than any other group.
Other factors that can (and do) affect the insurance are the driver’s record. If a driver has been charged for drink driving or been involved in an accident, the premium will be higher. Also, the insurance policy will only provide a limited cover.
The third factor that insurance companies will look at is the purpose the vehicle will be used for. They have three categories for vehicle usage, which are:
Use for social, domestic, pleasure, travel, and also in connection with business travel by the policy holder for his partner, employer or him or her self.
Use for social, domestic, pleasure, travel and for business purposes of the policy holder or that of his partner.
All the above plus commercial travelling.
These risks exclude taking part in a car rally, racing or carrying passengers for money. But, car sharing is allowed.
Another important factor that car insurance companies look at is the district that the car will be kept in. Some districts have a higher car theft rate than others. At times in certain districts an insurance company will refuse to cover a car that is left out in the open over night.
Another factor that an insurance company looks at is the excess. This is an amount for minor damages or repair work the motorist will not file a claim. He will only file a claim if the repair amount exceeds a pre-determined amount.
This is something that is decided between the insurance company and the motorist. A motorist can save on premiums by entering such an agreement.
These are the factors by which insurance companies work out car insurance premiums and the amount of insurance cover they will provide.
By James Clapton