Is Car Insurance Too Expensive?

The price of the car insurance policy is surely a growing concern for car drivers all around the world – as you may have noticed, the price of the premiums has slightly dropped over the past several years, especially after the financial crisis. However, car owners (especially the young ones) still need to pay a hefty sum on their insurance policy, for several reasons that you will find detailed here:

Is Car Insurance Too Expensive? What Are The Main Reasons?

The most common reason why car insurance ends up being so expensive nowadays is because of the growing number of fraudulent claims that take their toll on the honest drivers who still need to pay high sums of money on their premiums. To put it simple, many car owners fill fraudulent claims hoping that they will be entitled to financial compensation from their insurance company, and this is why thousands of fraudulent claims are filled on a monthly basis. In spite of the fact that known scammers are identified and they are in a database, the number of frauds is still very high. The notion of fraudulent claims encompasses a variety of dishonest claims, including the well-known whiplash claims that are the most difficult to prove from a medical point of view. Insurance companies pay massive sums of money on these whiplash claims, and all that money needs to come from somewhere. 

In addition to the fraudulent claims which are partly responsible for the high costs of the car premiums these days, another aspect that can lead to an expensive insurance is the negative driving history. The more traffic tickets you got throughout the years, the more likely you are to pay a high price on your insurance, given the fact that your car insurance company places you in a high-risk category and they do not want to take any chances. 

However, if you have been charged for more serious offenses such as DUI, then the price of the policy increases even more – even the smallest stain on your driving history will be taken into account when calculating the price, this is why it is important to be a responsible driver. As a matter of fact, if the driver was caught driving under the influence of either drugs or alcohol, some insurance companies may consider him a severely high risk driver who is very likely to cause another accident in the future.

Your age, on the other hand, may also be an important factor in spite of the fact that you have no control over it – given the fact that most car insurance companies consider young drivers to be inexperienced, thus more likely to cause an accident or to get a ticket, they set higher prices for their annual car insurance. This is why all the insurance companies will firstly check your driving history report prior to calculating the price of your premium. 

A short and bad driving history is surely the recipe for expensive car insurance. Basically, there are two types of drivers: those that are commonly referred to as standard drivers (who have a clean driving history and never caused any accident or got any ticket) and non-standard drivers, often referred to as high-risk or severely high-risk drivers (depending on how many accidents they have caused, their severity or the number of tickets they have received throughout their driving history). In some cases, a non-standard driver may end up paying two to three times more than a standard driver, and this is surely very motivating to start adopting a responsible driving conduct. 

A reckless behaviour is not only dangerous for the other participants in traffic, but it also turns out to be very damaging for one’s wallet as well – however, if you want to legally drive a car you will need to take out such a policy regardless of how expensive it may turn out to be, otherwise the legal punishments will be a lot more severe. 

Few people know that the horse power of their vehicles can also increase the price of the insurance, as high-speed sports cars also fall in the high-risk category, given the fact that these drivers are more likely to cause a collision or to get a speeding ticket. Moreover, the overall price of the car as well as the price of the replacement parts are not neglected either – the more expensive the car, the more expensive the premium, and that is totally understandable. Replacing an original car part can cost the insurance company up to several tens of thousands of dollars, and this is why they might set a higher price for the car insurance. 

As some statistics reveal, approximately 20% of the young drivers are likely to cause an accident or to get a ticket within the first several years of driving, as opposed to older and more experienced motorists, thus the price difference when it comes to the car premium. Even so, young drivers can significantly lower the price of their premiums provided that they choose a basic car and they have no driving convictions whatsoever. Moreover, in some areas they can opt for the classic pay-per-mile system which also allows them to reduce the overall price of the premium. However, it must be said that the lack of experience alone is not the only culprit behind the expensive price of the car insurance – most insurance companies focus on the type of car and on its price tag, as some cars are more likely to be vandalized or to be targeted by thieves than others.

Conclusion

To conclude, in spite of the fact that car insurance prices can be sky-high sometimes, these premiums are extremely important for all drivers, not just to protect yourself but also to protect other people in the traffic. Moreover, the legal requirements in most areas also ask you to have a car insurance, simply to prevent unpleasant situations. Improving your driving history, opting for a cheaper car and sticking to the driving rules is the fastest and most efficient way to lower the yearly cost of your premium. 

Scott Jeffries is a car mechanic from Sydney, Australia.

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge