Plan Insurance Blog

Why are motor trade premiums so expensive?

Plan Insurance  motor trade sales agent William answers the commonly asked question, “Why are motor trade premiums so expensive?”

As I speak to motor traders all over the country on a daily basis this is a question I’ve encountered on countless occasions.
When people are looking to purchase motor trade insurance for the first time, whether its for a motor trade premises or a road risk only basis, they always enquire as to why their policy is more expensive then someone else’s or their own private car insurance.
In this blog post I’ll highlight 4 of the major factors that combine to increase motor trade premiums.

Factor 1: Age

In recent months a number of insurance companies have begun charging higher motor trade insurance premiums for younger drivers. Younger motor traders between the ages of say 25 – 30 have to pay significantly more than the older people taking up motor trade insurance as statistics prove younger drivers are far more likely to be involved in incidents that give rise to claims. Unfortunately due to this drivers under 25 are often priced out of the market entirely.

Factor 2: Area

Insurers work out area ratings for motor trade premiums based on claims ratios in that area. These are statistics which are clear indicators on which areas typically claim more than others. Actuaries would sit down and spend hours ensuring these figures are accurately calculated.
It’s unfortunate that a few people in your area claiming can affect you but the insurers must rate the areas in order to keep running. Crime rates and population density will play their part in the ratings.

Factor 3: Convictions/Claims

If you are unfortunate enough to have claimed on a previous policy or had convictions on your license this generates a loading when calculating a policy, which increases your motor trade premiums. If you want to keep insurance costs down keeping a clean license and doing all you can not to claim have become more important than ever before.

Factor 4: Motor Trade Experience

With an influx of non motor traders recently taking out motor trade policies, the insurance companies are scrutinising who they offer cover to more than ever before. If it is a new venture and you have no provable motor trade experience you will in some cases be charged more than those who have been in the business for longer until you have a proven track record of being able to run a motor trade business claim free for a number of years.
When you think about it, a motor trade road risk policy can be covered by car insurance for a stock of numerous vehicles  at your home address with each one insured up to the declared indemnity. This fact alone could be used to justify why motor trade premiums would be more expensive than a private car or commercial vehicle policy.
As market leading and specialist motor trade insurance brokers, Plan Insurance can compare more motor trade premiums to find better value insurer rates than anyone else. Rest assured we will do all we can to keep your costs as low as possible.