Structural Factors That Raise The Price Of Car Insurance
The price paid by every single car-insured client depends on a series of factors
that correspond to demographic and social characteristics of the driver such as age, income, type of car and previous infraction records. However, these are not the only elements determining the high process for car and motorbike insurance as macroeconomic and social factors also play a role in increasing the cost of insuring a vehicle.Among these, the still amazingly high number of people who drive without an insurance and that makes it so that insurance companies have to charge those who have effectively contracted one. These uncovered drivers, whose cost is imputed to the companies clients, are involved in a great percentage of road accidents and have the highest number of fines. In fact, these drivers are ten times more likely to be driving under the influence of alcohol and six times more likely to drive a vehicle that has not passed the legislations required controls. The British drivers associations estimates state that this factor adds to the cost of insuring a car in England 30 euro annually for every client.
Another factor that influences the increase of prices in car and motorbike insurance and that is out of the control of the driver is the growing number of firms offering replacing vehicles and rent cars. Since customers are offered this option, many people that find themselves without a car as a consequence of a road accident decide to rent a substitute one for a while. At the time of calculating the damage compensation by the part at fault to the damaged one, this cost is added to their insurance company, making the final amount owed by the firm a lot higher.
Moreover, especially during the last few years, a greater number of people have been suing for road accidents and small fender benders. Insurance companies claim that people are now more likely to start a cause than before with the hopes of receiving a little cash, but also that fraud has increased in the form of false or premeditated incidents. In addition, the democratization of the lawyer firms and damage compensation companies, now closer to consumers, has made it so that legal assistance be more accessible, thus making the number of cases increase.
Other factors that can have an effect on insurances for vehicles are the country of residence and current legislation. Countries with less strict road regulations have a better chance at presenting higher costs for car insurance. Moreover, high crime rates are associated to greater costs for insuring a car.
Although the prices do not cease to increase, insurance companies claim that the industry has not registered profits for over 10 years, and that the premiums paid for damage compensation are higher than the income generated by insured clients payments. This is mostly due to the structural factors that have altered market dynamics and not to the single characteristics of the final insurance clients that end up paying the additional cost.
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