Car Insurance: Faster cars may more but why?

ianh · 13 Apr 2011 at 16:06

Hi there, with the cost of insurance rising faster than my bank account can understand I though I'd see if anyone knew the answer to this question because something doesn't seem right to me -

1. If high power cars get charged more because they're involved in more claims, has any company actually added up the claims in 1 year for all the high power cars (250hp+) and all the other cars to get an average claim for each type for comparison? My thinking is that more normal cars are involved in more everyday accidents because there's more of them about and whilst there are some idiots about, most high powered cars are driven normally 90% of the time.

I'm asking beacuse my insurance has come around on my BMW740 which is classed high power car and has a high premium yet I've never had a bump since my test 1995 whilst my mates 1.9 Punto is like a moving target for old biddies in Stoke and he's been hit 6 times in 2 years, yet his premium is lower because the car isn't a high power one.

-Ad- · 13 Apr 2011 at 16:10

Specialist brokers or Classic insurance = WIN

Performance cars don't have to be expensive to insure.

Jez · 13 Apr 2011 at 16:10

I cannot fathom what you are saying? A car such as a BMW 740i is a more powerful more dangerous car, with higher repair costs and much greater mass to cause 3rd party damage to that of a Punto 1.9. Of course it represents a higher risk :confused:

Barks · 13 Apr 2011 at 16:15

Insurance premiums are calculated based on statistics.

Intuition is that age/experience is a far more important factor than the actual quantity of high performance cars on the roads. The BMW could also be more of a target to theft and vandalism and thus in the event of either would result in a larger payout.

Furthermore high performance cars are usually more expensive/equipped relative to the other, inferior, models, again relating to higher potential payouts.

ianh · 13 Apr 2011 at 16:41

Jez said:
I cannot fathom what you are saying? A car such as a BMW 740i is a more powerful more dangerous car,

Sorry but it's that "generic" rubbish I can't understand. My 740 hasn't been involved in any accidents since it was biult in '95 and it's only cost my company £70 for a windscreen chip in all time I've had it yet my mate in a "safe" car has been in loads of accidents costing his company £1000's. So why do I still pay more on a car thats Proven less "dangerous" than his.

This is the point I'm trying to make - has anyone ever added up the total amount of claims paid in one year against every BMW 740 or Punto or Mondeo or Ferrari etc to see if the "fast car = dangerous = more money" idea has any truth because everyone just trots out the same old cliches without anyone being able to point to a years statistical proof and say "there you go £300 per year 'safe car' vs £9000 per year for 'dangerous' here's the proof" and |I'm damn sure that more money was paid out this year repairing Mondeos/Puntos this year than Ferraris

div0 · 13 Apr 2011 at 17:06

ianh said:
Sorry but it's that "generic" rubbish I can't understand. My 740 hasn't been involved in any accidents since it was biult in '95 and it's only cost my company £70 for a windscreen chip in all time I've had it yet my mate in a "safe" car has been in loads of accidents costing his company £1000's. So why do I still pay more on a car thats Proven less "dangerous" than his.

Because the insurance companies still consider you a bigger risk than him.

From an insurance point of view, they obviously feel that there's more chance of you having 1 big (expensive) crash, than there is of him continuing to have lots of smaller (cheaper) crashes.

ianh said:
I'm damn sure that more money was paid out this year repairing Mondeos/Puntos this year than Ferraris

And more will have been paid to the insurance companies (in total) for insuring the mondeo's/punto's, as there's many, many more of them on the roads.

Mr Jack · 13 Apr 2011 at 17:06

ianh said:
This is the point I'm trying to make - has anyone ever added up the total amount of claims paid in one year against every BMW 740 or Punto or Mondeo or Ferrari etc to see if the "fast car = dangerous = more money" idea has any truth because everyone just trots out the same old cliches without anyone being able to point to a years statistical proof and say "there you go £300 per year 'safe car' vs £9000 per year for 'dangerous' here's the proof" and |I'm damn sure that more money was paid out this year repairing Mondeos/Puntos this year than Ferraris

Google 'actuary'.

Insurance companies do not rely on hearsay!

pcoltrane · 13 Apr 2011 at 17:07

ianh said:
I'm damn sure that more money was paid out this year repairing Mondeos/Puntos this year than Ferraris

Yes probably true, but I'm also certain that more money was spent insuring Mondeos/Puntos than Ferraris! So what's your point?

ianh said:
This is the point I'm trying to make - has anyone ever added up the total amount of claims paid in one year against every BMW 740 or Punto or Mondeo or Ferrari etc to see if the "fast car = dangerous = more money" idea has any truth because everyone just trots out the same old cliches without anyone being able to point to a years statistical proof and say "there you go £300 per year 'safe car' vs £9000 per year for 'dangerous' here's the proof"

Insurance is based on risk - of course they use statistical analysis to determine the risk associated with each type of car and thus determine the cost required to cover that risk!

A BMW 740 is more likely to cost an insurance company more in claims than a Punto, thus it costs more to insure.

Since you mate seems particularly accident prone (rather than the punto itself!) you would expect to see his insurance premiums rise significantly though after 6 claims regardless of the car he drives.

However I notice you say 6 "accidents" not claims. Was there a claim on all 6 of those accidents? Its worth considering that a punto may well be involved in many incidents where the owner decides not to claim because its a crappy punto. No claim = no cost to the insurance company = lower risk to them = Lower premium!

[TW]Fox · 13 Apr 2011 at 17:28

ianh said:
Sorry but it's that "generic" rubbish I can't understand.

I am at a loss as to how you cannot understand this.

My 740 hasn't been involved in any accidents since it was biult in '95

You can't possibly know this - just because it hasn't had a bump big enough to write it off doesnt mean it's never had paint.

and it's only cost my company £70 for a windscreen chip in all time I've had it yet my mate in a "safe" car has been in loads of accidents costing his company £1000's. So why do I still pay more on a car thats Proven less "dangerous" than his.

You were lucky and he was unlucky, it doesnt change the fact that in general a 740i is:

a) More capable of getting itself into a mess
b) More expensive to fix when it does
c) In theory more desireable

Therefore the insurance costs more.

Your logic is hilarious, are you saying somebody who has never crashed and has a Bugatti Veyron should be able to insure it for free?

I'm damn sure that more money was paid out this year repairing Mondeos/Puntos this year than Ferraris

Just... wow.

It isn't the total of all the cars, it's the claims per x policies.

If 10 people own a 740i and 1 person crashes, thats 1 claim per 10 policies and only a single 740i crash.

If 100,000 people own a Fiesta and 5,000 people crash thats 0.5 claims per 10 policies, HALF as many as the 740i, yet in isolation wow, look, 5000 Fiestas have crashed.

Skidder · 13 Apr 2011 at 17:34

ignorance is bliss

ubersonic · 13 Apr 2011 at 17:41

[TW]Fox;18895912 said:
Your logic is hilarious, are you saying somebody who has never crashed and has a Bugatti Veyron should be able to insure it for free?

To be entirely honest I would say that in fairness a person with 5 years NCD and a clean licence should be able to insure a Veyron 3rd party cheaper than a person with 0 NCD and 6 points can insure an EVO, but it doesn't work like that.

At the end of the day insurance isn't a service its a business, and they want money, their risk/profit is somewhat predictable but at the end of the day insurance companies are a law unto themselves and no matter how well they try and price their policies to balance their risk/profit they will always be off the mark by some reason. I.E I changed my policy from a 197bhp NA FWD car with 4WS to a 276bhp TT RWD car (arguable a hell of a lot easier to crash) and they gave me £30, lol.

ianh · 13 Apr 2011 at 18:14

I think people have stopped reading the top post so I'll post it again -

"1. If high power cars get charged more because they're involved in more claims, has any company actually added up the claims in 1 year for all the high power cars (250hp+) and all the other cars to get an average claim for each type for comparison? My thinking is that more normal cars are involved in more everyday accidents because there's more of them about and whilst there are some idiots about, most high powered cars are driven normally 90% of the time."

THAT is the question I asked, nothing else, nothing about a BMW and a Punto they were only my reason for asking! I then gave reasons as to why I was asking (no honestly, if you actually READ my post there's not a question in any part about myself and my friends car differences).

OK, so while I feel it's unfair the way I pay more and of course I understand why to an insurance company, I'd like my original question answering - has anyone ever done the maths to Prove the insurance companies right/wrong?

[TW]Fox - I think you've not read the 1st post or only my 2nd reply, I'm not asking about me and my mates situation, that's only the 'reason' I asked a specfic question (which no-one yet has answered) although I admit the 2nd half of my 2nd reply does come across as through I'm not firing on all cylinders. Lastly I must thank you for telling me I can't possibly know the cars history. I think it is you who can't possibly know the cars history my friend, not without the Reg, or V5, or maybe the cars full service history log, all of which I have, a long with being the grandson of the man who originally bought it.

Skidder - You must be more blissful than most

(sorry to be childish but you didn't have to add that comment)

[TW]Fox · 13 Apr 2011 at 18:17

ianh said:
I think people have stopped reading the top post so I'll post it again -

"1. If high power cars get charged more because they're involved in more claims, has any company actually added up the claims in 1 year for all the high power cars (250hp+) and all the other cars to get an average claim for each type for comparison? My thinking is that more normal cars are involved in more everyday accidents because there's more of them about and whilst there are some idiots about, most high powered cars are driven normally 90% of the time."

THAT is the question I asked, nothing else,

I've answered it. Go and read my post again, properly this time.

Hint: Claims per x policies, not claims overall.

Lastly I must thank you for telling me I can't possibly know the cars history.

You are welcome.

Did you know that a sizeable proportion of brand new cars are involved in incidents requiring bodyshop work before they are even delivered?

ZG002 · 13 Apr 2011 at 18:23

Are you on fairy dust?

Fox answered your question!

Just because there are fewer of a certain car doesn't mean it's less likely to be crashed.

Say there are 100 fiestas and 10 are crashed. You have 10% of them crashed, Then you have say 20 Veyrons and 2 are crashed. You still have 10% of those cars were crashed.

Not sure how else someone can put it to you.

joemo13 · 13 Apr 2011 at 18:36

ZG002 said:
Are you on fairy dust?
Say there are 100 fiestas and 10 are crashed. You have 10% of them crashed, Then you have say 20 Veyrons and 2 are crashed. You still have 10% of those cars were crashed.

And replacing a single veyron is more expensive than replacing 10 crashed fiestas, so the insurance is cheaper.

Jez · 13 Apr 2011 at 18:42

Motors sinks to a new level

DM · 13 Apr 2011 at 18:45

joemo13 said:
And replacing a single veyron is more expensive than replacing 10 crashed fiestas, so the insurance is cheaper.

You started drinking before me havent you, come on

BennyC · 13 Apr 2011 at 18:47

I don't think you understand. Insurance companies want to make profit. Offering people bargains isn't their priority.

More expensive cars are, surprise surprise, more expensive to repair.

Irrelevant of your driving history or your friends for that matter if you crash a £20,000 car (for arguments sake) your insurance company is going to have to pay out. If you crash a £2,000 car it's going to cost them a hell of a lot less. Hence they don't require as much money from you to insure it to stop them going under, when they pay out, should you crash it.

I don't think you're quite getting it that a car with a larger engine, more power, more torque, higher top speed is capable of causing much more damage than a banger firing on 3 cyclinders. Regardless of how you drive all it takes it one incident for someone to walk out in front of you, your concentration to lapse or you to just merrily plow in to someone and your insurer is met with a huge bill. Charging you cheap premiums isn't going fund expensive repairs.

joemo13 · 13 Apr 2011 at 18:48

DM said:
You started drinking before me haven't you, come on

I just haven't stopped from last night..

Just to say I drive a Volvo V40, and the insurance on that is mega cheap.

ianh · 13 Apr 2011 at 18:50

[TW]Fox - No, but you you haven't.

Ok folks, one last time before I go the pub (it's even in BOLD too) -

"1. If high power cars get charged more because they're involved in more claims, has any company actually added up the claims in 1 year for all the high power cars (250hp+) and all the other cars to get an average claim for each type for comparison? My thinking is that more normal cars are involved in more everyday accidents because there's more of them about and whilst there are some idiots about, most high powered cars are driven normally 90% of the time."

A Very Simple Question you'd think. An answer to it could be "Yes", "No" or maybe "Yes, in 19** 'Any Worldwide Insurance Company' claimed to have spent £300 per claim on insurance group 15 or below cars this year vs £600 per claim of cars in above group 15. Here is the link with the statistical data published by 'any worldwide insurance company'"

THAT would be an answer to the question I have repeatedly asked, not "Hint: Claims per x policies, not claims overall." I haven't even asked a question about BMW's and Puntos