(Know Risk)
The cost of motor vehicle insurance is determined by the level of cover – the more cover taken, the higher the cost will be, and the level of risk. When you buy motor vehicle insurance, the following factors are considered:
| Factors affecting insurance | Specific example of risk factors |
| Age and gender of the driver | Young (18-25) male drivers are a higher risk than other age and gender categories because statistically they have more accidents
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| Driving record including history of accidents | Many insurance companies reward ‘no-claim’ drivers with lower costs because they have a proven track record of driving without accidents.
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| Whether the motor vehicle will be used for private or business use | Private use is considered less of a risk as the vehicle is not used as much or driven as hard.
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| Whether the motor vehicle was purchased for cash or is under finance | Insurance companies need to know if there are other parties, such as banks, that have an interest in the vehicle as there is a link between credit rating and accidents. People who own their vehicle outright tend to have less accidents.
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| Whether the motor vehicle is to be parked or stored in the city, suburbs or the regional areas | Cars in the city are more likely to be stolen or in accidents than those in the country.
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| Make and model of the motor vehicle | Some cars are more expensive to repair and later model cars often have more safety features. |
Source: Know Risk
