Is Car Insurance Calculated the Same the World Over?

UK drivers have enjoyed some reductions in their car insurance premiums over the past few months, which has been caused by new gender neutral policies, as well as by ongoing competition within the insurance sector. However, there can be some significant differences between car insurance policies around the world, which are often the result of varying regulations and levels of risk. How car insurance policies and premiums are calculated are also determined by local circumstances for drivers.

In the UK, the average cost of car insurance is currently around £1,100, although this can vary quite considerably once age and location are factored in. Younger drivers still tend to pay a lot more than older drivers, while those over the age of 55 can also suffer from increasing premiums. Decisions are made on insurance calculations from your past driving history, the kind of car you drive, and whether you’re doing everything you can to keep a car safe.

The level of risk attributed to a car insurance policy can rise and fall depending on different countries and their general insurance policies. In the United States, for example, the cost of insurance is different from state to state, and can be as high as $2,500 on average in Michigan, through to $995 in Vermont. Michigan also issues driver responsibility fees, and has a high proportion of uninsured drivers, which pushes up premiums.

The cost of car insurance can also be considerably different in countries where third party liability insurance is not mandatory; this is the case in South Africa and New Zealand, where the larger number of people without any form of insurance means that some individual policies can end up being large. Other factors that can affect insurance premium calculations can include limits of no claims discounts, which in France can be a maximum of 50 per cent of the policy’s value.

There are ongoing efforts, however, to standardise insurance costs and calculations. The EU Motor Directive of 2009 imposes rules over third party insurance across European member states, as well as practices for compensation and minimum claims. How rates and premiums are calculated still comes down to individual insurers, though, who can choose to be stricter or more lenient depending on their target market. Specialist insurers can be more relaxed, for example, about providing reasonable cover for kit cars or to drivers with spent criminal convictions.

Similar rules apply in Asia, where car insurance can range from the competitive policies and specialist rates of an insurer like Direct Asia in Thailand, through to China’s combination of nationalised and private insurance. Average calculations and the level of risk calculated across different drivers can consequently be affected by how much of a stake governments have in keeping insurance rates low, and the competitiveness of individual companies to offer low rates to customers.

Author Bio

Paul Taylor is a freelance blogger covering car insurance from around the world. He recommends that drivers check out www.directasia.th for more information on low cost insurance. When not looking for deals, Paul enjoys camping tours and caving.