Low kms Insurance?

[Crazy Dazz]

Does anyone understand exactly how this works?

So getting a quote for car insurance, they ask how many kms you drive, and the less you drive the lower the premium.
(I blame that annoying prat on the you-ee commercials)

Sounds great in theory, but how does it actually work?
Say I predict, in all honesty, "under 10,000 kms." Then in exactly 6 months time, I have an accident, and have driven 5,001 kms. Is my insurance invalid?
Or is it valid up to 10k, and once I hit that number I am nolonger covered?

On one insurer's online quote, there are only two choice, upto 10k, and upto 15k. Does that mean that if I think I might do 16k, they won't insure me?

Insurance is money down the drain, until you need it. No point "saving money" if its not going to be there if and when you actually need it.

[The Yeti]

I don't know even NRMA now ask how many km you do, for me its easy I'd had the car 2 years it had done 60,000km eg I do 30,000 a year and my premium was affected accordingly

And I'm on track for that this year as well but at no point did they ask for a start odometer reading

[buggo]

It will all comes down to what it says in your policy wording. Each insurer will have their own set of general conditions, exclusions, etc.

I had a quick look at the Youi PDS just now and there are no exclusions or even any mention of maximum distance driven, if cover will cease at 10,001 Km or any thing of that nature. The only reference to Km's driven is in respects to New Car replacement, and that a claimant is eligible for a brand new car if there's is written off prior to going over 40,000 Km's. That tells me that even if you say 10k km, you'll be covered at 50k km.

The reason that the insurer wants to know (roughly) how much you drive in a year is so they can more actually work out the likelihood that you will crash in the next 12 months. The Underwriters have access to all sorts of data, and the reasoning of this new trend is that it was found that the chances of crashing are not linear with Km's driven.

With this info, they could afford to reduce the premiums of those who drive very little (by doing so could win new business off other insurers charging more based on the old ratings) and inversely increase the premium of those who drive a lot more than average (by doing this, they can generate a larger premium pool or even make the covered person move to another, cheaper, insurer who has not yet done the sums, therefore removing the higher risk policies off their portfolio and saving themselves from claims)

Main point here is that it is extremely important to read and understand what product you are buying, what you are covered for, what you are not covered for, and what you could or could not be covered for in varying circumstances. This goes for all your insurance. It's boring as hell to read wordings, but it's the only thing that could potentially keep a car in your driveway or a roof above your head. Insurance is definitely a case of 'you get what you pay for', so make sure you understand what you're paying for.

[hawke]

A policy cant be cancelled or voided from inception, unless there is some extreme issue of fraud.

The worst that can happen if you exceed the number of km, is that you could be called to pay the extra premium.

[danzvtil]

Youi seem to have fostered an idea that the less you drive, the less you pay, BUT your premium is calculated on where you park it when you are NOT driving, you live in a rough neighbourhood, then youll likely pay more.

[Crazy Dazz]

Originally Posted by buggo

It will all comes down to what it says in your policy wording. Each insurer will have their own set of general conditions, exclusions, etc.

I had a quick look at the Youi PDS just now and there are no exclusions or even any mention of maximum distance driven, if cover will cease at 10,001 Km or any thing of that nature. The only reference to Km's driven is in respects to New Car replacement, and that a claimant is eligible for a brand new car if there's is written off prior to going over 40,000 Km's. That tells me that even if you say 10k km, you'll be covered at 50k km.

The reason that the insurer wants to know (roughly) how much you drive in a year is so they can more actually work out the likelihood that you will crash in the next 12 months. The Underwriters have access to all sorts of data, and the reasoning of this new trend is that it was found that the chances of crashing are not linear with Km's driven.

With this info, they could afford to reduce the premiums of those who drive very little (by doing so could win new business off other insurers charging more based on the old ratings) and inversely increase the premium of those who drive a lot more than average (by doing this, they can generate a larger premium pool or even make the covered person move to another, cheaper, insurer who has not yet done the sums, therefore removing the higher risk policies off their portfolio and saving themselves from claims)

Main point here is that it is extremely important to read and understand what product you are buying, what you are covered for, what you are not covered for, and what you could or could not be covered for in varying circumstances. This goes for all your insurance. It's boring as hell to read wordings, but it's the only thing that could potentially keep a car in your driveway or a roof above your head. Insurance is definitely a case of 'you get what you pay for', so make sure you understand what you're paying for.

The Woolworths Insurance is as dodgy as.
If you go over your kms, there is an extra "excess" payable. Their PDS actually doesn't say how much, nor does the quote. I had to ring them for that:
$2,000

[Pedro]

Originally Posted by danzvtil

Youi seem to have fostered an idea that the less you drive, the less you pay, BUT your premium is calculated on where you park it when you are NOT driving, you live in a rough neighbourhood, then youll likely pay more.

No ... not "likely"... you will pay more. Premiums are firstly based on postcodes. If your postcode shows high claims incidence then you will pay more.
And as for that dropkick on the "Yowie" ads, I know quite a few people who won't even apply for a quote with that insurance company because they hate him so much.

[XB GS 351 Coupe]

Originally Posted by danzvtil

Youi seem to have fostered an idea that the less you drive, the less you pay, BUT your premium is calculated on where you park it when you are NOT driving, you live in a rough neighbourhood, then youll likely pay more.

And so you should.

Insurance covers the risk, so if you are at high risk or spend more time on the road then you need to pay more. If your car is insecurely parked then you need to pay more.

Seems fair to me.

[FPV+fteT3]

Originally Posted by XB GS 351 Coupe

And so you should.

Insurance covers the risk, so if you are at high risk or spend more time on the road then you need to pay more. If your car is insecurely parked then you need to pay more.

Seems fair to me.

And if you own 2 cars you should pay double I mean because you can be driving both cars at once, thats exactly what they do … logic plays no part in being screwed by insurance companies always ring around when you get the renewal even your existing company can do better if you call and ask at renewal time.
I only have limited km policies on my collectable cars the daily has no such limits. Insurance is a business its all about getting the max dollars out of you they use words and phrases to justify you paying more "oh you drive more km we will have to charge you more"…its all symantics don't get sucked in.

[LTDHO]

I recall that statistically you are more likely to have an accident with 5klm of your home.

Maybe if you only do short trips, then you pay higher premium? :P

[buggo]

Originally Posted by Crazy Dazz

The Woolworths Insurance is as dodgy as.
If you go over your kms, there is an extra "excess" payable. Their PDS actually doesn't say how much, nor does the quote. I had to ring them for that:
$2,000

Yeah those Coles / Woolworths are pretty much cheap junk.
Woolies Insurance is underwritten by Hollard, and Coles is underwritten by WFI Insurance, which is a Westfarmers company (as is Coles) and backed by AIG. They may be cheap bu they have there drawbacks, such as that $2000 distance excess which just seems ridiculous to me and it's stuff like that that gives the whole industry a bad name.

And if you own 2 cars you should pay double I mean because you can be driving both cars at once, thats exactly what they do … logic plays no part in being screwed by insurance companies always ring around when you get the renewal even your existing company can do better if you call and ask at renewal time.
I only have limited km policies on my collectable cars the daily has no such limits. Insurance is a business its all about getting the max dollars out of you they use words and phrases to justify you paying more "oh you drive more km we will have to charge you more"…its all symantics don't get sucked in.

Driving isn't the only time your vehicle is exposed to losses or risk. Why wouldn't you think you'd have to pay more for two cars over 1? Why wouldn't it be reasonable for the insurer to assume that while both cars may be in your name, one could be driven each day by your wife or something? A car sitting parked for 12 months is still exposed to vandalism, weather damage, fire, theft, etc.

It's just like any other business. If some company thinks they can offer the same product for less, they will. Then the company losing business will lower their prices to compete, because without premium, you can't pay claims. And if you can't pay claims then you aren't an insurance company any more.
The margins in insurance are a lot less than I'm sure you think. In my line it's in the range of 4-5%. As motoring has a much larger volume, it's most likely less than that again.

I'm not sure why having to pay more because you drive more is getting sucked in. You have more exposure and are more of a liability, why wouldn't you pay more than someone who represents half the risk? It's not 'symantics'.

[FPV+fteT3]

buggo the margins on insurance are much more than 5% if you call IAG today and ask to speak to the national head of their "foundation" a section used to spend excess money on community projects to minimise tax payable and give them tax relief you will speak to my daughter so dont assume I know nothing about insurance and margins and profit made and methods to increase shareholder revenue. But hey if your happy to pay more and think they operate on 4-5% its all good.

[buggo]

Originally Posted by FPV+fteT3

buggo the margins on insurance are much more than 5% if you call IAG today and ask to speak to the national head of their "foundation" a section used to spend excess money on community projects to minimise tax payable and give them tax relief you will speak to my daughter so dont assume I know nothing about insurance and margins and profit made and methods to increase shareholder revenue. But hey if your happy to pay more and think they operate on 4-5% its all good.

I'm an underwriter so I'm not just talking out of my bum here.

And yes IAG and every other big insurer make hundreds of millions each year, but these aren't from 20+% margins.

I looked up IAG's 2015 annual report just now and their combined ratio was 94.8%. Combined ratio means all written premium, minus claims, and minus all business expenses. That left them with 5.2% on top.

That 5.2% still gives them a tidy sum after writing $11,440,000,000 in 2015.

[Ben73]

Originally Posted by XB GS 351 Coupe

And so you should.

Insurance covers the risk, so if you are at high risk or spend more time on the road then you need to pay more. If your car is insecurely parked then you need to pay more.

Seems fair to me.

The problem is some post codes cover vastly different suburbs. In Newcastle anyway.

I used to live in a pretty safe suburb, I parked in my driveway or behind a locked gate. But it shared a postcode with a couple of more dodgy suburbs.

I then moved to a suburb that I would consider worse, but still not a bad. I started parking on the street but I got a partial refund due to the postcode.

I moved for the third time that year but remained in the second post code. I got another insurance premium refund for moving to a 'better' suburb. I now live in the main street, next to a pub, park on a narrow road with a major bus route and have trucks flying by. My car is surround by other cars right near some dodgy looking units.
My car is parked in a much higher risk situation, but I still pay less.

Soon I will be moving back to the original "bad" postcode but will be parking in a locked garage in a new estate. I bet my premium will go up again.

I know insurance companies can't have a different premium for every street in the county, but still they are not as fair as they make out they are.

[Stefan]

Originally Posted by Crazy Dazz

Sounds great in theory, but how does it actually work?
Say I predict, in all honesty, "under 10,000 kms." Then in exactly 6 months time, I have an accident, and have driven 5,001 kms. Is my insurance invalid?
Or is it valid up to 10k, and once I hit that number I am nolonger covered?

Not trying to be captain obvious here, ask your insurer about the specifics of your policy in respect to kms. Then also read the PDS to confirm.

If you have an accident, I doubt you can go back and say user "XYZ" from Ford Forums told me I'm covered.

[mike_nofx]

Originally Posted by Pedro

No ... not "likely"... you will pay more. Premiums are firstly based on postcodes. If your postcode shows high claims incidence then you will pay more.
And as for that dropkick on the "Yowie" ads, I know quite a few people who won't even apply for a quote with that insurance company because they hate him so much.

I refuse to use YOUI now because their quoting system is annoying. You can't online quote, you fill in the details online then someone calls and pesters you a few times asking if you've made up your mind.

[Falcojimmy]

Went through the whole box and dice with the Youii quote for my XR50 - They took two hours to work out they were $1200 more expensive than my existing policy despite me insuring the car for non work use. I reckon the only way you could save is if you don't drive, keep your car locked in a secure garage and live in a ritzy neighbourhood.

[LTDHO]

Originally Posted by mike_nofx

I refuse to use YOUI now because their quoting system is annoying. You can't online quote, you fill in the details online then someone calls and pesters you a few times asking if you've made up your mind.

I refuse to use YOUI because of their ad's!

[brismike]

Originally Posted by mike_nofx

I refuse to use YOUI now because their quoting system is annoying. You can't online quote, you fill in the details online then someone calls and pesters you a few times asking if you've made up your mind.

Yep .. I wanted a quote from them just as a comparison to other insurance options. Went online etc and filled in all the bs webpages to be told at the end that some-one would call me WTF?

They ****ed me off bigtime by then constantly calling back after the initial conversation where I told them I was shopping around and would let them know if I needed them. They just kept annoying me even when I told them they were no-where near the others.

Will never go near them again.

Cheers Mike