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How are renewal quotes calculated?

When it’s time to renew your insurance, you’re faced with a tough choice – stay, or go… Sometimes the choice is easy, but sometimes it is less clear cut. We’re here to help you to 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 all the details you’re asked to provide and look at 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 brought the policy?

During the year many factors can change that could affect the price that you will be offered for renewal: • If you have a black box, your driving score before your renewal date will be considered
• 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

WiseDriving is an insurance broker, this means that although we manage and arrange the insurance, the cover and price will be provided by an insurer. They are the ones who provide the cover and will deal with any claims that you might need to make.

We have a panel of different insurers that we can offer customers policies with. The insurer you are with will be shown on the welcome or renewal invite email as well as on your insurance documents.

When offering a new policy or a renewal, each of our insurers will offer a new price based on your ‘risk’ details, we will then offer you the policy with our cheapest price available. When you renew, this could be with your existing insurer, but it could also be a new one.

We manage and arrange the policy, so all your documents and emails will come from us, but the cover itself and the price that you pay 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. What we mean by risk changes is; 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 re-looked at until renewal.

When the renewal is due the insurer will look at all the details against 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 make sure that we give you the best price we can. 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, that address could have been a lower risk as 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 address at renewal has become a higher risk, so this is then 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, if you gain another year’s NCD, move to a low risk area or start parking your car in your garage instead of on the road. Making changes like these that reduce your risk, could help save you money at renewal.

Posted on July 19, 2021
Category Car Ownership

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