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The Bentley Story
It may seem expensive but the fact is that the vast majority of actual insurance underwriters make little or no profit initially; some of them actually pay out more on claims and other costs than they get back in premiums. They do make money though by investing those premiums on what they consider to be safer investments; this is why so many insurers own large blocks of commercial property.
They also have high overheads! Apart from paying out on claims someone has to pay for claims investigators, security systems, and antifraud measures; plus there are others taking a cut of the premium before it even reaches the underwriter. The majority of businesses that advertise car insurance are not actual underwriters themselves at all, they are brokers who package up policies and resell them. They add their own costs and commissions to the price that you have to pay. After them there are the price comparison websites; they don't work for nothing and they charge the insurers either for every enquiry they send them, or every sale that they generate.
Let us then look at advertising! Many of the biggest companies such as moneysupermarket and confused.com spend millions of pounds every year on advertising their policies; they have to get the money for this from somewhere and it is from out of what you pay to insure your car, whether it is a magnificent Bentley or a humble little Fiat.
There are two possible reasons for this. One is that the insurance company that you are with is deliberately increasing the premium it charges to existing customers. This gives them more leeway in offering cheap deals to new customers. An average insurer loses around 25 percent of the motorists on it's books every year so they have to attract new business constantly. The easiest and most popular way of doing this is to offer really bargain priced policies to new motorists, gambling on the fact that when they increase the premium the following year the same motorists won't notice and will just renew automatically. This works quite well because even though price comparison websites are heavily advertised the majority of motorists still don't shop around at every renewal time.
The other reason is that costs have genuinely risen for the insurers. Insurance premium tax always seems to go up rather than down and car repair costs are always increasing. The activities of compensation claim companies hasn't helped either; whereas most claims are genuine there are a certain number that are dubious to say the least, if not downright fraudulent. Combating fraud is in fact one of the major headaches of insurance companies.
Yes it is, on average. Women tend to have fewer accidents than men; which means that more of them have large no claims discounts; and again, on average, they tend to drive smaller cars. The smaller the car is the less damage it will do in an accident and it is less likely to be driven by a speed freak who will take unnecessary risks. Insurers cannot offer lower premiums just because an applicant is female; but they can adjust premiums according to an applicant's job. Is it a coincidence that the lowest premiums are offered to those in jobs or professions which attract a higher proportion of women than men?
Firstly there is no such thing as a woman – only insurer. No insurance company can refuse to cover someone because of that person's sex. There is nothing on earth to stop a young man from buying a policy from a website that obviously caters for women; however there aren't that many men who are attracted to a site which offers free handbag cover or extra cover for baby chairs!
However the fact that a motorist is male or female is only one part of a very complex calculation that insurers use to come up with a premium. Where a driver lives can have a huge effect on how much a policy will cost; some rural areas have extremely low accident rates whereas certain inner-city areas in places such as Birmingham Liverpool or Manchester have such a high level of accidents and car theft that some insurers will not cover people who live there at all. The car that is to be insured can make huge differences as well; big fast expensive cars not only tend to create more damage and injury when they do crash but also cost a lot more to repair too.
Different insurers however look at these risks in a different way. There is no point in going to an insurer that will charge you less because you happen to be female if that same insurer will charge you a lot more than others would because you happen to drive a 3.5 litre car or live in a high accident postcode. This is why price comparison sites can help you get much lower premiums by letting you compare the overall cost from many different insurers.