Introduction
In today’s article, we will discuss the 10 factors that classify you as a ‘high-risk’ insurer or insured in Takaful car insurance, as we would say. This is where several people have questions: what forces their rates up and how should they deal with it? If you are one of the people who wish to know what exactly causes you to be higher risk and how to avoid it, allow me to go forward.
How Often Claims Are Made?
Almost all companies, in most states, have a chance of modifying their policies all thanks to their claims frequency. States may have a three or a five-year policy but companies may choose for themselves – to look for claims risk in a three- or five-year period. There are companies that look only at three years of claims history irrespective of the five – year policy of the state. Because of this variability, these policies could affect how much premium you pay. It is important to understand these policies well.
Even though most states do not put much weight on comprehensive and towing claims, companies still consider these payouts to be important. The objective of insurance companies is to profit, which they try to achieve by matching premiums to expected claims. If they cannot achieve that intended margin, you may be dropped and suggestions made to the effect you look for cover elsewhere.
Serious Violations
Once one is found guilty of serious violations like a DUI or reckless driving, high-risk driver status is given. Such claims usually involve large amounts in damages, some injuries and even deaths. Insurance companies, generally, are not risk averse and lid sell their policies at different levels of risk. Some companies might even be targeting the higher risk drivers with policies priced surprisingly a lot cheaper than normal for individuals with all these violations.
It is relevant to note, however, that substantial claims and the DUIs usually stay in your record for about a decade, much longer than other claims. The continuing effect also demonstrates the level of concern insurers have for such infractions.
Medical claims
These types of claims have the highest impact and involvement on the policy in respect to the other types, although they do not always impact the policy in the same manner. The ambiguity of the potential costs is what makes insurers cringe the most as these costs can go well over the Insured’s capital. It may be difficult to pay high premiums for those who have medical cover but live in areas prone to risks and violence due to medical cover e.g. sue against potential medical expenses that may be wraparound.
Lapsing of Insurances
A gap in coverage, no matter whether it’s purposeful or unintentional, can lead to exorbitant rates. Missing just one day between policies, for example, may be treated as though you are a brand-new customer. New policies involve the highest risk for insurers as there is no history available. Fortunately, once you reach the next renewal period, you may regain access to better rates as you will have rebuilt trust with your insurer.
How the Vehicle is Used
The way you use your vehicle will affect the level of risk you pose. Generally, you have three types of use; that is, personal use, which comprises pleasure driving, use to work or school, which is commuting, and lastly use for commercial purposes, which is business use. A motor vehicle used for business purposes normally has a very high risk because the points of destination are not very specific, hence causing the premiums to be moderately higher.
Distance Covered During Driving
Mileage that you have driven over the years is also a risk determinant. The farther you are going in your car, the more chances you have of being involved in car accident. Companies will usually keep track of your mileage through data sharing, oil change service customers’ databases, or odometer photos where a request by the insurer has been made. For some drivers who drive less than 8,000 to 10,000 miles in a year, these drivers may be coopted in discount schemes. If however you go over the standard driving distances, then you are considered to have increased risks.
Credit Score or Insurance Score
Furthermore, all insurers are also interested in what is called the ‘insurance score’, a score that bears resemblance to the individuals credit score. It is common for premiums to be quite affected due to a bad credit score with many voluntarily or involuntarily claims being made. It is wise to have an insurance company’s policy and overal cost to minimize as this score of your credit is good for them, financially responsible, and a good indicator. It is often argued, but many insurance companies’ insurance companies support the position that risk scores evaluate credit suffice to make such predictions.
Age of Drivers
Because of their age, young persons with provisional driver’s license are referred to as ‘young’ drivers. When parents add young drivers to their policies, premium costs usually rise by an average of $100-$200 per month. When a young person takes a personal policy however, that cost goes up by over three such premiums when the driver was already covered by another policy. There is a possibility of young drivers not being included on insurance policies allowing for reduced costs for parents.
Changes That You Made in Vehicle
There was a time in the past where alterations in the vehicle have become the norm even among the general public, however, there still remains some motives that lower the chances of foreclosure for the insurance agencies. A notable example would be a lift kit that is embedded within a car or a stereo system that could cost over $900 that has capabilities beyond that of the standard models, these changes would force the vehicle to have to be insured to a higher premium. Jeep and other M.P.O. Vs that are almost guaranteed to be rolled over some day in their lifetime can also costume a lot of money when trying to insure as well as police interceptor cars.
Nature Of the Occupation
Even though they can’t refuse to offer insurance due to a specific occupation, there is still consideration for the people occupation and how they are going to use the insured car, for example, a taxi driver may have to seek public domain policies for hire and drive system. On the other hand, construction workers can also shoulder their job risks however, at a cost that can potentially rise up to their built policies. Further, the choice of this or that policy type should be made wisely to obtain proper coverage because the ridiculous insurance premium is the last thing that a reasonable person wants to pay.
Conclusion
To articulate, a good number of aspects determine the level of risk in an insured driver. A few of such parameters could be history associated with claiming procedures, serious or not so serious violations, and quite importantly driving habits or vehicle mileage amongst many others. There are various strategies for overcoming such increments of cost such as constant coverage sustaining, proper arrangement of the claims, and timely awareness as regards to the various jobs and how such work correlation with insurance requirements. My name is Muhammad Ismail from Car4Save; thank you for reading and see you in the next article.
