Why Do Quotes Vary So Much Between Car Insurance Companies?
And the difference can be substantial.
How can this happen? Car insurance companies make their money by collecting premiums from hundreds of thousands of customers, and hope to paying out benefits to the relatively small number who make claims.
The trick is to collect more in premiums than they pay in claims, to cover their costs and make a profit.
Of course it is slightly more complicated than that, but that's the general principle of how they do their business.
Every car insurance company employs a team of underwriters to assess the risk of insuring a particular car and person, and price their policy accordingly.
Contrary to rumors,underwriters are human beings, not a machine.
And each underwriter despite his/her training and education has a different view on how to assess risk.
Each of them have a different way of calculating the risks you are likely to have with your car.
That's why they want to know all that personal information in order to know how much to have to charge you.
Car insurance companies also calculate their profit differently.
New entrants looking to build market share often shave their margins to attract new customers.
Some insurers deliberately set sky-high premiums to certain categories of motorists, such as young drivers, to steer them away.
Online car insurance websites put you in the driving seat.
You no longer have to find a broker on the high street or spend hours telephoning different insurance companies to compare quotes.
Just submit your information once and then you will get an overview of various car insurance policies.
And most of the time you will also able to apply for quotes directly.
Before you do this online, do read articles about how to get cheap car insurance.
It's important to know what you have to compare and how to compare.