Using Incidence Rates To Make Better Buying Decisions

February 25, 2017 · Posted in General Articles on Car Insurance 

There are many confusing terms associated with car insurance plans. Many of them can be confusing to first time insurers who may be unfamiliar with contract wording. The term “incidence rate” is a way the insurance company examines the risk level of the vehicle in question. It’s important to understand how incidence rate affects you since it is an integral part of the scrutiny the insurance company will use to determine your rates.

When one applies for insurance the company is not only interested in their driving record, but also in the kind of car they drive. There are several factors that may affect the incidence rate of a car, such as its popularity among car thieves due to value after disassembly, weaknesses that could lead to accidents or failures, or the temptation that the driver will engage in reckless driving due to superior performance levels.

How are these incidence rates determined? Whenever a vehicle is involved in a theft, accident, or traffic violation, the law enforcement agencies specify the make and model of the vehicle. These statistics are compiled into a database which shows which vehicle types are more likely to be involved in these incidents. The insurance industry uses these statistics to determine the risk level of each vehicle type and adjusts premium rates accordingly.

It seems common-sense that sports cars are more likely to be involved in reckless driving incidents or speeding violations. But there are also some incidents that are not so obvious. For instance, statistics show that a white or light-colored vehicle is more likely to be involved in accidents than darker vehicles. Knowing this information can help consumers make better decisions about the types of vehicles that they choose. Incidence rates can be found either by searching the Internet, or by asking a car dealership for the information. By knowing this information and how it affects your insurance premiums, you will be able to see why your quotes differ from other drivers with similar driving records.

Every year thousands of cars are stolen and never recovered, which makes some cars a big risk for insurance companies. If your car is listed as being likely to be stolen and sold for parts it could hurt your rates. You can counteract this by installing security features to deter thieves or help you locate your car.

If your car is a color that’s more likely to be hit by another car, such as white, you can add uninsured or underinsured motorist protection to ensure that you are covered in case the other driver isn’t. Most of the time the insurance company will allow a lower rate in this case as they’re protected from extra costs. Remember that even though it’s illegal to drive without insurance it’s still very common to find people who don’t think they need it. You have to think ahead to protect yourself in this situation.

By knowing the incidence rates associated with your vehicle and the ways to offset them you can ensure lower rates, but it works both ways. It’s possible to research and seek out the cars that have the lowest theft rates and best safety records in order to get the lowest possible insurance rates. When advertisers note good performance and safety records they’re really drawing your attention to the possibility of lower rates.

Graham McKenzie is the content syndication coordinator for South Arica’s leading Car Insurance portal.

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