Many clients wonder why the value of their vehicles decrease at annual premium renewal stage, but the premiums increase.
It is important to understand that the actual value of the vehicle is not the main deciding factor when your insurer reviews your premium. In fact, the value of the vehicle is only relevant when it is either written off or stolen.
Write off/theft only accounts for around 15% of insurance costs and these events are less frequent. 10% goes towards the administration costs of the company and the remaining 75% can be attributed to the cost of repairing accident damaged cars.
Accidental damage claims make up the bulk of claims that your insurance company faces and it is these high frequency events coupled with the escalating cost of spare parts and labour to repair vehicles that insurers have to factor in when adjusting premiums.
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