Risk information - how is the price of your van insurance calculated
In order for an insurance company to offer a premium for you they need to know about
the risk they are taking on. Generally speaking the risk types that insurers use to
calculate a premium are the same, but due to the competitive nature of insurance and
that no two risks are identical, prices can vary from one company to another.
As previously mentioned, please remember motor insurance falls under
“utmost good faith” which means you are required to inform the insurer of any
relevant information whether it was requested or not.
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Insurance companies will always ask about your claims history within the last 3 years,
some will want to account for the last 5 years. No matter how long a history they require,
they will need to know about all claims in that time regardless of blame.
If you have had a number of fault claims then you'll probably find your premium becoming
more expensive. It may seem harsh when this happens however an insurance company will
no doubt take the stance that given the prior fault claims you are more likely to have
other fault claims due to your driving style and so warrant a higher premium.
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Just as you are rated on your driving history so will any drivers you wish to be added
to your policy.
Adding a driver who can be defined as a safe risk (such as no claims or convictions,
driving for over twenty years) may cost nothing more than an administration charge.
However, many insurers charge for mid-term changes on your policy. If you add a driver
who's under 25, has a claim or conviction, then you can expect an insurer to add a
substantial amount to your policy given increased risk of an accident occurring.
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Insurance companies will rate on driving convictions. Simply put, if you have a conviction
(or convictions) on your licence then to an insurer you will appear to be a greater risk
on the road than a driver with no convictions. An insurance company will probably ask
for details of convictions in the last 3 to 5 years, mirroring the time span for claims.
Undoubtedly you will have noticed the dramatic increase in speeding cameras now spread
across the U.K. This has meant that a greater number of people now have speeding convictions
on their licence which has led to higher premiums. However, it is unclear at this time
whether or not insurers' haven taken a view that they won't rate or load as much as they
did prior to the incursion of speed cameras.
There are of course a whole variety of different conviction types such as driving without
a licence, drink driving, and reckless driving and so on. Understandably, the more serious
in nature the conviction, the more the insurers will load the premium. There is also the
added possibility that an insurer may add some terms to a policy or only offer lesser
levels of cover for more serious convictions.
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Anything and everything that may have an effect on your ability to drive will need to be
notified to the Driver and Vehicle Licensing Agency (DVLA). The
DVLA website
holds a great deal of information about driving and medical conditions which should
help clarify any questions you need answering. You may like to use the following link:
http://www.dvla.gov.uk/medical/ataglance.aspx.
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The more time you spend on the road the more likely you are to have, or cause an incident.
So, an insurance company will increase the cost of a premium the more mileage you cover.
As with all the risk information you supply, it should be as accurate as possible.
Admittedly though there are many people who say they cover the same mileage year after
year, this may not remain true if you change jobs or move address.
Van insurance companies will often ask about the work radius you will cover. Work radius
is classed as the furthest distance you will travel from your main place of work. So not
to be confused with annual mileage, you can cover thousands of miles in connection with
your business but if the furthest point you travel away from your main place of business
is 40 miles away, then 40 miles is your answer to work radius.
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Certain occupations will be classed as a higher risk perhaps not only due to high
mileage but because of goods being carried within the vehicle. For example a builder
may carry over a £1000 worth of equipment in their vehicle. An insurer may consider
this a far greater risk of the vehicle being stolen and potentially damaged or not
recovered. Other occupations which carry a higher risk with insurers are entertainers,
chefs and those linked with licensed premises.
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Van security is one of those things you simply should have. Being able to lock the van
doors isn't enough to deter a van thief and insurance companies are well aware of this.
Security devices can range from steering locks to alarms and /or immobilisers. It's a sad
fact that van theft and break-ins are commonplace within most towns and cities.
Increasing the level of security fitted as standard to vehicles and improving the quality
of installation of security systems has helped to minimise insurance premiums and reduce
insurers' costs. The scheme was extended in 1996 to include light commercial vehicles, in
1997 to include heavy commercial vehicles and again in 1999 to motorcycles.
If you have a van alarm and/or immobiliser fitted it is less likely that your van will
be stolen - you can therefore expect to pay less for your motor insurance policy than
someone who has no security device on their van.
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Vehicle value will play a major factor in how cheap or expensive an insurance premium will
be. If your van is worth £7,000 or £70,000 and is involved in a serious accident or is
stolen then you would expect the Insurer to foot the bill up to the full vehicle value.
So, your insurer would have lost money. It doesn't take a lot of working out to realise
that an annual premium must make up for some of the potential loss.
Of course not everybody is guaranteed to make a claim so the insurer can attempt to balance
the costs of their premium in order to remain competitive. Also, some vans are less expensive
to repair than others, perhaps due to availability of parts.
While an insurer is only ever going to pay you book price for your vehicle in the event
of a claim, should you advise the insurance company of a lesser vehicle value when you take
out the policy, there is a clear possibility your van insurer will not pay more than the
figure advised, regardless of the book price.
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Much the same as vehicle value, an older vehicle can often receive discounted rates as
the vehicle value is lower.
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Use of your vehicle will have a substantial effect on the premium. If you only use your
vehicle for driving between family and friends or to go shopping, this would be the most
minimum risk to an insurer. However, if you use your vehicle for both social and business
use, you will face a higher rate from your insurer, as you are considered at greater risk
of having an accident or claim due to the extra mileage or goods you may carry.
Your policy and certificate will confirm exactly what you are covered for.
- Social, domestic & pleasure - This allows cover for day to day driving, such as a visiting family, friends or going shopping.
- Commuting - This covers a driver to and from one fixed place of work. It also includes travelling & parking at a railway station.
- Business use - This allows use of your car in connection with your job, such as driving to more than one place of work.
- Commercial travelling - This covers the van to be used for such things as door to door sales.
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Your address is another important factor to an insurance company when it comes to assessing
your premium. In an urban area you can expect increased levels of traffic as opposed to
the countryside which could mean there is a greater chance that your van will be involved
in an accident, become vandalised or even be stolen. Certain areas have a higher incidence
of vehicle crime and vehicle insurance premiums tend to reflect that risk.
Also leaving your van out on the road overnight, rather than in a locked garage may result
in higher premiums.
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