Motor Vehicle Insurance:How Insurance Companies Assess Your Risk

How do insurance companies assess your risk when you buy a car or motorbike?


The cost of motor vehicle insurance is determined by the level of cover - the more cover taken, the higher the cost will be, and the level of risk. When you buy motor vehicle insurance, the following factors are considered:


Factors affecting insurance

Specific example of risk factors

Age and gender of the driver

Young (18-25) male drivers are a higher risk than other age and gender categories because statistically they have more accidents


Driving record including history of accidents

Many insurance companies reward ‘no-claim’ drivers with lower costs because they have a proven track record of driving without accidents.


Whether the motor vehicle will be used for private or business use

Private use is considered less of a risk as the vehicle is not used as much or driven as hard.


Whether the motor vehicle was purchased for cash or is under finance

Insurance companies need to know if there are other parties, such as banks, that have an interest in the vehicle as there is a link between credit rating and accidents.  People who own their vehicle outright tend to have less accidents.


Whether the motor vehicle is to be parked or stored in the city, suburbs or the regional areas

Cars in the city are more likely to be stolen or in accidents than those in the country.


Make and model of the motor vehicle

Some cars are more expensive to repair and later model cars often have more safety features.