Many people have secured insurance policies for most of their assets, especially vehicles. However, many people do not quite understand what really goes into determining their insurance prices (forsikringspriser is the term in Danish). Understanding how premiums are determined when buying a truck or a car is paramount. This is even more important for those who are making entry into the trucking sector. The common practice is that one actually pays premiums, even before they or their insurers know that there will be an event of a loss, not even knowing how big it might be. This explains why insurers consider various factors that may increase or decrease the loss occurrence probability and the expected loss size. So, what are some of these factors?
The first factor is the type of vehicle that one drives. Car insurance prices are normally based on the particular car’s sticker price, its repair costs, its theft likelihood and its overall safety records. This is according to some research conducted by certain insurance information institutes. For instance, the cost of repairing a brand-new car priced at $300,000 will certainly be higher than the costs of fixing a second-hand car of a $20,000 price range. This difference will clearly reflect on insurance premiums.
One’s profile of driving – The driving profile is one of the most important factors that most insurance companies look at during the determination of insurance prices. Here, most insurers will want to know the exact number of miles covered annually, one’s ticket and accident history and so forth. Normally, the fewer the number of times that one drives is, the lower the risk of an accident and, subsequently, the fewer the chances of making claims. With safer driving – implying a driving history involving minor or no accidents at all and without movement violations – the insurance premiums will be lower. On the other hand, with a “bad” profile, the insurance rates will be high.
The driver’s personal information – This will include essentials such as occupation, age and so forth. All of these factors and other related information will be used by insurers to determine one’s insurance prices since these companies base rates on actuarial driver’s information. Age is perhaps the most targeted factor for most insurance companies. This is because of the presumption and the general rule that young drivers get involved in more accidents than old drivers. This is for the reason that fewer years of driving increase the probability of risks. This explains why younger car owners pay higher insurance premiums than their mature counterparts.
The driving record also determines the insurance prices that one has to pay. One’s stating MVR – motor vehicle record plays an important part in determining the particular insurance rates to pay. This record is the first evaluation, and certainly one of the information documents that most underwriters and agents review. When one has been certain moving violations in their MVR, whether for a private or for a commercial vehicle, chances are that they will incur higher insurance premiums. According to statistics, drivers who have violations always have repeated violations, and that increases the possibility of accidents. If one has a good MVR – without violations, then one will certainly get favorable quotes from the intended insurance company.