Saturday, June 13, 2009
Friday, June 12, 2009
How insurance companies are taking young drivers for a ride
Shelling out for a new car is enough of a financial burden as it is - even with the Government's scrappage scheme offering incentives.
So it can come as quite a shock to youngsters who have saved up to buy car to realise that their expenses may have only just begun - and they're set to get a lot more eye-watering.
Opting for a sporty model - that's the Peugot 206 GTi, for example, rather than the standard 206 - can push up your annual insurance premium by up to £6,485, taking the final cost of insurance to more than £11,000 for a young driver under the age of 21.
Buying a Peugeot 206 GTi, above, instead of a standard Peugeot can add up to £6,500 to insurance premiums while simple modifications can cost drivers dearly
Those three letters come at a price - and if your car happens to be second-hand - and you can pick up a used Peugeot 206 GTi for £2,500 - that means insurance costing more than four times the price of your car.
And the hidden costs don't end there. Simple modifications that cost car owners a few hundred pounds can end up adding large sums to their insurance bill. Research found that go-faster extras add an average of £2,682 to young drivers' insurance premiums.A rear spoiler can add £700 to a premium, while other modifications like tinted windows and upgraded exhaust systems also push up cover, comparison website uSwitch found. The cost of insurance for cars with modifications ranges from an additional £88 for a car with simple side skirts to £756 for tinted windows on a Ford Focus 1.6.On the same car, adding flared wheel arches can add almost £3,500. For those that go the whole hog with exhaust system changes can expect to pay an £6,225 - bringing the total car insurance cost up to £10,516.All drivers have seen their car insurance premiums rise by almost 10 per cent in the last 12 months, but new research by uSwitch.com reveals that, despite rumblings of an equality bill, it's still not an even playing field.Young drivers aged between 17 and 21 make up just seven per cent of motorists but foot 32 per cent of car insurance premiums - paying more than £3bn for their car insurance. If the Government's latest Equality Bill is passed the car insurance industry will have to openly justify the proportionate differences in young drivers' premiums.Some experts believe the hiked premiums for young drivers are justified.They account for 34 per cent of dangerous driving offences and out of the 8,479 drivers who were killed or seriously injured on the road in 2007, 30 per cent were under the age of 25. Young male drivers are ten times more likely to be involved in a motoring accident.Mark Monteiro, an insurance expert at uSwitch, said: 'Car insurance for young drivers is already really expensive so opting for cars that fall into a more expensive insurance group really isn't advisable.'"Insuring cars like the Peugeot 206 GTi will cost more than actually buying the car in the first place. As soon as modifications are made such as spoilers and tinted windows, premiums will rocket further.
'The Equality Bill has been designed to bring an end to age and gender discrimination across industries and places of work, as well as introduce more transparency.'If the Bill becomes law, the motor insurance industry will only be able to lawfully impose higher premiums for young drivers if based on published actuarial and statistical data.'Whether the Equality Bill comes to be passed or not, the most important advice to young drivers is to research the cost of insurance before you purchase a vehicle.'
So it can come as quite a shock to youngsters who have saved up to buy car to realise that their expenses may have only just begun - and they're set to get a lot more eye-watering.
Opting for a sporty model - that's the Peugot 206 GTi, for example, rather than the standard 206 - can push up your annual insurance premium by up to £6,485, taking the final cost of insurance to more than £11,000 for a young driver under the age of 21.
Buying a Peugeot 206 GTi, above, instead of a standard Peugeot can add up to £6,500 to insurance premiums while simple modifications can cost drivers dearly
Those three letters come at a price - and if your car happens to be second-hand - and you can pick up a used Peugeot 206 GTi for £2,500 - that means insurance costing more than four times the price of your car.
And the hidden costs don't end there. Simple modifications that cost car owners a few hundred pounds can end up adding large sums to their insurance bill. Research found that go-faster extras add an average of £2,682 to young drivers' insurance premiums.A rear spoiler can add £700 to a premium, while other modifications like tinted windows and upgraded exhaust systems also push up cover, comparison website uSwitch found. The cost of insurance for cars with modifications ranges from an additional £88 for a car with simple side skirts to £756 for tinted windows on a Ford Focus 1.6.On the same car, adding flared wheel arches can add almost £3,500. For those that go the whole hog with exhaust system changes can expect to pay an £6,225 - bringing the total car insurance cost up to £10,516.All drivers have seen their car insurance premiums rise by almost 10 per cent in the last 12 months, but new research by uSwitch.com reveals that, despite rumblings of an equality bill, it's still not an even playing field.Young drivers aged between 17 and 21 make up just seven per cent of motorists but foot 32 per cent of car insurance premiums - paying more than £3bn for their car insurance. If the Government's latest Equality Bill is passed the car insurance industry will have to openly justify the proportionate differences in young drivers' premiums.Some experts believe the hiked premiums for young drivers are justified.They account for 34 per cent of dangerous driving offences and out of the 8,479 drivers who were killed or seriously injured on the road in 2007, 30 per cent were under the age of 25. Young male drivers are ten times more likely to be involved in a motoring accident.Mark Monteiro, an insurance expert at uSwitch, said: 'Car insurance for young drivers is already really expensive so opting for cars that fall into a more expensive insurance group really isn't advisable.'"Insuring cars like the Peugeot 206 GTi will cost more than actually buying the car in the first place. As soon as modifications are made such as spoilers and tinted windows, premiums will rocket further.
'The Equality Bill has been designed to bring an end to age and gender discrimination across industries and places of work, as well as introduce more transparency.'If the Bill becomes law, the motor insurance industry will only be able to lawfully impose higher premiums for young drivers if based on published actuarial and statistical data.'Whether the Equality Bill comes to be passed or not, the most important advice to young drivers is to research the cost of insurance before you purchase a vehicle.'
Saturday, May 16, 2009
Reduced home insurance or car insurance cover could be devastating
BIBA (British Insurance Brokers’ Association) has warned that customers reducing their home insurance or car insurance cover to save money during the recession could be devastating.
According to BIBA research, over 20% of insurance brokers have found that cutomers taking out car insurance or home insurance have reduced their level of insurance cover during the recession.
BIBA Chief Executive, Eric Gailbraith, said ‘The economic downturn generates an increased focus on cost’ and added we ‘are warning consumers about the dangers of reducing cover without guidance from a broker.’
Customers are reducing their home or car insurance cover primarily by
reducing the sums insured increasing the excesses reducing non-essential cover and add-ons Customers need to be very careful about reducing their home insurance or car insurance cover.
Clearly it is important that you have insurance that meets your needs, otherwise should you need to make a claim you face the possibility of it not being met, partially or in full, by your insurer.
Insurance brokers can provide you with assistance or there are many websites that you can use to get an insurance quote.
Source
According to BIBA research, over 20% of insurance brokers have found that cutomers taking out car insurance or home insurance have reduced their level of insurance cover during the recession.
BIBA Chief Executive, Eric Gailbraith, said ‘The economic downturn generates an increased focus on cost’ and added we ‘are warning consumers about the dangers of reducing cover without guidance from a broker.’
Customers are reducing their home or car insurance cover primarily by
reducing the sums insured increasing the excesses reducing non-essential cover and add-ons Customers need to be very careful about reducing their home insurance or car insurance cover.
Clearly it is important that you have insurance that meets your needs, otherwise should you need to make a claim you face the possibility of it not being met, partially or in full, by your insurer.
Insurance brokers can provide you with assistance or there are many websites that you can use to get an insurance quote.
Source
Friday, March 13, 2009
Car insurance about to hit roof
CAR owners could be in for a nasty shock following confirmation from two leading short-term insurance companies that vehicle insurance premiums are soon likely to rise.
Managing Director of Mutual & Federal Gerson Katjimune said the pending increases were not linked to the inflation rate, but rather to the weakening of the Namibian dollar since most vehicle parts are imported.
Economic difficulties and financial turmoil in countries that Namibia and other Southern African countries import car parts from, would inevitably translate into higher parts prices in Namibia and other countries in the region.
He could not say by how much car insurance premiums would rise in percentage terms, saying this would depend on the risk profile or “loss ratio” for each individual insured client.
“It will depend on the portfolio of the individual client and whether or not they have a high loss ratio,” he noted.
As early as June this year, the South African Insurance Association warned that insurance premiums could increase by as much as 15% due to the worsening economy and rising motor-related claims — the major source of insurance claims.
With the further weakening of the exchange rate, the possibility exists, that motor vehicle premiums for some motorists may increase well above the projected 15%.
South African newspaper Business Report recently quoted figures showing that locally manufactured vehicles had an average local parts content of 35%.
This means that almost two-thirds, by value, of parts fitted to all vehicles after accidents were imported.
“Before the industry used to impose across the board blanket increases, but the system is now far more sophisticated and depending on your profile you might not have to pay much more than you do now,” Katjimune said.
Santam Chief Executive Riaan Louw said profitability of the motor account (motor insurance) of the short term insurance industry in Namibia had been under pressure for some time now.
“Although we tried to manage the increase of cost of claims with segmented increases and underwriting measures per clients portfolio, the N$/US$ exchange rate can influence the cost of repairs even more,” he said.
Santam, he said, monitors the situation on a weekly basis and the company makes continuous corrections according to trends.
“We suggest to our clients/policy holders that are under pressure with higher premiums to ask their broker for a higher first amount payable to help keep the premium affordable.
“Clients also need to make sure the insured value of their motor vehicle is at replacement value and not more, because this has an effect on premiums and clients can save on insurance costs by insuring for correct value,” he said.
He suggested people call their broker for advice, cautioning that in these tough financial times it had become even more important than ever to have insurance for unforeseen risks.
Car Insurance Source
Managing Director of Mutual & Federal Gerson Katjimune said the pending increases were not linked to the inflation rate, but rather to the weakening of the Namibian dollar since most vehicle parts are imported.
Economic difficulties and financial turmoil in countries that Namibia and other Southern African countries import car parts from, would inevitably translate into higher parts prices in Namibia and other countries in the region.
He could not say by how much car insurance premiums would rise in percentage terms, saying this would depend on the risk profile or “loss ratio” for each individual insured client.
“It will depend on the portfolio of the individual client and whether or not they have a high loss ratio,” he noted.
As early as June this year, the South African Insurance Association warned that insurance premiums could increase by as much as 15% due to the worsening economy and rising motor-related claims — the major source of insurance claims.
With the further weakening of the exchange rate, the possibility exists, that motor vehicle premiums for some motorists may increase well above the projected 15%.
South African newspaper Business Report recently quoted figures showing that locally manufactured vehicles had an average local parts content of 35%.
This means that almost two-thirds, by value, of parts fitted to all vehicles after accidents were imported.
“Before the industry used to impose across the board blanket increases, but the system is now far more sophisticated and depending on your profile you might not have to pay much more than you do now,” Katjimune said.
Santam Chief Executive Riaan Louw said profitability of the motor account (motor insurance) of the short term insurance industry in Namibia had been under pressure for some time now.
“Although we tried to manage the increase of cost of claims with segmented increases and underwriting measures per clients portfolio, the N$/US$ exchange rate can influence the cost of repairs even more,” he said.
Santam, he said, monitors the situation on a weekly basis and the company makes continuous corrections according to trends.
“We suggest to our clients/policy holders that are under pressure with higher premiums to ask their broker for a higher first amount payable to help keep the premium affordable.
“Clients also need to make sure the insured value of their motor vehicle is at replacement value and not more, because this has an effect on premiums and clients can save on insurance costs by insuring for correct value,” he said.
He suggested people call their broker for advice, cautioning that in these tough financial times it had become even more important than ever to have insurance for unforeseen risks.
Car Insurance Source
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