When it’s time to renew your insurance, you’re faced with a tough choice – stay, or go…
Sometimes the choice is easy, other times it isn’t clear cut. We’re here to help you understand how your renewal price is calculated, and to debunk the myths around insurance ‘risk.’
Insurance prices are based on what is called ‘risk.’ An insurer will take your details and compare them with statistics to see how they affect the chances of a claim being made.
So, why is my renewal price different to the price I paid when I bought the policy?
Many things can change in a year, and any of these factors could affect your renewal price:
- Any claims or convictions you’ve had during that year
- If you have gained any No Claims Discount
- Change of details such as address, occupation, or purchasing a different vehicle
- Got a black box? Your driving score before your renewal date will be considered
WiseDriving is an insurance broker. So, although we manage and arrange the insurance, the cover and price will be provided by an insurer. They will also deal with any claims that you might need to make.
We have a panel of insurers that we use. The insurer you are with will be detailed on the welcome or renewal invite email as well as on your insurance documents.
Whether it’s a new policy or a renewal, each of our insurers will offer a price based on your ‘risk’ details. We will then offer you a policy. When you renew, this could be with your existing insurer, or it might be a new one.
We manage and arrange the policy, so all your documents and emails will come from us. However, the quote and the cover itself will be provided by the insurer.
So why didn’t my insurance go down in price at renewal?
Over the course of your policy year, your risk details can change.
When a policy is first taken out, the details will be looked at against our insurers’ perceptions of risk at the time and the price will be calculated based on this. Unless changes are made, these will not be reconsidered until renewal.
When the renewal is due, the insurer will compare your details with the more recent statistics to calculate the price for the next year. We’ll also check them against the other insurers on our panel to give you a price. During the last year, these figures could have changed, which means the risk may have also changed.
Here’s an example to add some context:
Last year, when your policy was first taken up, your address could have presented a lower risk if the crime and accident rates were low in that area.
During that year, those statistics could have changed, and accident and crime rates could have gone up. That would mean that the address has become a higher risk at renewal, so this is reflected in the price.
Also, if the insurer has seen a high number of claims made for accidents involving a particular vehicle or engine size, they may deem that vehicle a higher risk than the year before.
However, changes in risk can also cause your renewal to go down in price. For example, you might:
- Gain another year’s No Claims
- Move to a low-risk area
- Start parking your car in your garage instead of on the road
Making changes like these may reduce your risk at renewal.
Correct at the time of publication. Information in this article has been gathered from various sources, therefore WiseDriving cannot be held responsible for any view or opinion expressed herein.
