Motor Trade insurance too difficult to understand?
A recently published study found out that the majority of brits actually don’t quite understand how motor insurance is calculated and find the whole process too difficult to understand.
The Co-op insurance polled 2,000 motorists and the results are surprisingly interesting:
Over half of the people polled reported that they did not understand how policy prices were calculated. Furthermore, 86% of those polled believed that policies were too difficult to understand and needed to made easier to comprehend.
The study found that 42% of people were unaware whether their insurance provided cover if another driver claims personal injury compensation following an accident.
Another issue that arose within the poll seemed to be the add-ons that policies offer, 36% reportedly stated that add-ons were confusing and many said that they were not sure whether the add-ons would have a major impact on their policy or not.
Perhaps most surprisingly is the amount of people that are unaware what their policy even covers: 28% of people do not understand what is covered by their policy and 39% are unaware of features their policy doesn’t cover.
Reportedly, the results of the pull reported that many are unaware of why prices of premiums tend to fluctuate each year – up to two fifths of people do not understand what causes the increase and decrease of prices annually.
Now we have gone over some of the statistical analysis of how the industry is received by much of the public, it’s time to explain some of the points the poll showed people were struggling with. Firstly, when it comes to determining the price of your policy, the calculations are often based upon how many people similar to you have had to make a claim and how much each of these cost to put right. In other words, prices often depend on the following factors:
- How much it costs to cover such things as damage to your vehicle, another vehicle or property.
- How much medical compensation may cost if another person was to be injured in any way due to your actions
- How much it costs the insurance Company to run and the margin for their profits
- The government Insurance Premium Tax.
These bullet points are the general rule of thumb for how most insurance is calculated, whether it be HGV, Fleet, or Motor Trade Insurance.
This isn’t to say that other factors won’t influence the price of your premium however; insurers will often take into account your own personal situation, such as life history, previous claims or convictions, any accumulated no claims bonus and age. It would be safe to assume that an experienced 40-year-old driver would be able to get a much lower premium than an inexperienced 18-year-old would.