How car insurance company work

How car insurance company work

How car insurance company work

Every car insurance company is a risk taker. The car insurance company need to make enough money to survive as a business. They always need to have a large capital of money so they can pay out claims made against the car insurance company. The car insurance company is professional so they will calculate the cost, profit and risk on every potential person they plan to insure.

A number of factors that determine the price

There are big differences between the car insurance premiums on the car insurance market. The simple reason is because there are a number of factors that determine the price. If you are a young driver with an car accident record and you drive a car with a high powered engine. Then you have to pay a higher car insurance premium compared to an older driver with long driving experience and a clean record. The car insurance company both got long experience and they are good at calculation to determine probabilities and margins. So with other words, if they calculate that the risk is higher that you would be involved in a car accident, the higher will be the cost of your car insurance. Because they see a higher risk of loss.

The three main types of car insurance cover:


The law requires that you have a certificate of car insurance. You can read more about the different car insurance types in our other articles. However the minimum car insurance requirement for driving a car is to be insured against third party.

How the car insurance company handle you

Every car insurance company of course want to reduce their exposure to risk for car accidents. Most of the claims when there have been a car accident are resolved without causing too much trouble for you. If you are a higher risk then the car insurance company cover it with a higher insurance premium. If you are a low risk car driver today but turns out to be a high risk. The insurance company will shift it subsequent to the driver in the form of a higher car insurance premium.

The insurance company try to cover itself

The insurance company charge you with higher car insurance premiums or worse - they will try to invalidate your car insurance. Many times is the definitions of "fault" not at all the same in definition compared to what you think. The car insurance companies without exception automatically classified young drivers or drivers without driving experience for a high risk.

There are three main factors that affects your car insurance premium

  • Your address
  • Your car
  • You

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