Car Values Decrease while Insurance Premiums Increase - 21 Oct 2009 14:23
A pet peeve of every insurance policyholder is the increasing of insurance fees annually. Every year insurance premiums go up, despite the fact that the value of the car decreases every year, and at a faster rate than any other possession. Why is this?
The reason for this is that accidental damage accounts for 90 percent of all car insurance claims. Accidental damage has no immediate relation to the value of the car. This means that insurers only ever pay out the value of the car, when the car is written off – 10 percent of the time. Managing Director of Alexander Forbes notes that the value of the vehicle is only ever relevant when total loss occurs. Similarly, the damage caused to third party property is also not relevant to the value of the vehicle.
The increasing costs involved in repairing vehicles contributes to rising premiums. Newer cars come with increasingly sophisticated devices, xenon lamps and technology that can very rarely be repaired and almost always needs to be replaced.
Improving the security of your vehicles will do little to reduce your premiums as well, as theft is very rarely claimed for and not usually a factor when deciding the rate of insurance premiums. Because accidents are more likely, these push up premiums more.
The problem with accidents pushing up premiums, is that the premiums are calculated not necessarily according to your driving behaviour but accident statistics. This means that your premiums are supplementing more than just your driving history, but uninsured cars and other insured drivers cars as well.
The best advice then, is to, instead of modifying your car, modify your driving behaviour to be on guard against poor drivers. The more accidents you’re involved in, the higher the to the insurance company, which means everyone pays more.
A pet peeve of every insurance policyholder is the increasing of insurance fees annually. Every year insurance premiums go up, despite the fact that the value of the car decreases every year, and at a faster rate than any other possession. Why is this? The reason for this is that accidental damage accounts for 90 percent of all car insurance claims. Accidental damage has no immediate relation to the value of the car. This means that insurers only ever pay out the value of the car, when the car is written off – 10 percent of the time. Managing Director of Alexander Forbes notes that the value of the vehicle is only ever relevant when total loss occurs. Similarly, the damage caused to third party property is also not relevant to the value of the vehicle.
The increasing costs involved in repairing vehicles contributes to rising premiums. Newer cars come with increasingly sophisticated devices, xenon lamps and technology that can very rarely be repaired and almost always needs to be replaced.
Improving the security of your vehicles will do little to reduce your premiums as well, as theft is very rarely claimed for and not usually a factor when deciding the rate of insurance premiums. Because accidents are more likely, these push up premiums more.
The problem with accidents pushing up premiums, is that the premiums are calculated not necessarily according to your driving behaviour but accident statistics. This means that your premiums are supplementing more than just your driving history, but uninsured cars and other insured drivers cars as well.
The best advice then, is to, instead of modifying your car, modify your driving behaviour to be on guard against poor drivers. The more accidents you’re involved in, the higher the to the insurance company, which means everyone pays more.