Car insurance intended to provide financial support to losses: damaged car, body hurt … sustained by an insured or a third person in an automobile accident and to spread the risks and costs.
Above all, you must know that the main business of your cheap no deposit car insurance is to manage risk. Your insurance will attempt to assess the risk and compensation in case of accident and on that basis calculate the risk premium.
The risk premium
Example 1: Suppose young driver inexperience and fiery, a 1 chance in 100 of having in a year a big accident which cost an average of 50,000 $ and one chance in 10 of having a small accident that cost 2000 $.
The risk of this young driver is: 50,000 $ * (1/100) + 2 000 $ * (1/10) = 700 $. On average, a young driver will cost 700 $ per year for insurance.
Example 2: An experienced driver has 1 chance in 200 to have a big accident and one in 20 chance of having a small accident. Twice with less risk of an accident it will cost on average € 350 a year in insurance.
Obviously, all this is only an average, and some old drivers cost more expensive compensation than young drivers but statistically speaking, if your risk of an accident increases your risk premium will also increase.
Namely: the risk premium represents the bulk of the cost of your insurance.
In an accident, it must be an employee of your insurance processes your file. Wages but also the local insurance, the computer system is reflected in the price you pay for your insurance.
In addition to the risk premium and the management fees, the price of your insurance also includes taxes, but also fraud insurance and the premium refunded to the Common Fund of car warranty. As supermarkets affect the flight of the price tags, the insurance fraud increases the cost of insurance for honest people.
Last component of the price of your insurance: the margin. Insurance has a profit goal; they will try to sell insurance at a higher price at cost to make a profit which will be paid to shareholders.
As for mutual non-profit oriented, they must certainly liberate a margin (if they do not, they make losses, leading to bankruptcy), but these lines will be reinvested for the insured. If the margins are too high, insurance premiums will decrease the following year, for example.
Originally posted 2013-05-18 15:55:17.