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.|
Source: Know Risk