We often receive frantic ‘phone calls from people who have purchased sports cars, only to find that they are being asked to pay fantastic premiums for comprehensive coverage. All we can do is to recommend Companies who seem to be more generously disposed towards sports cars but all sports car buyers should get a firm quotation before they order the car. If the chance of selling a car hangs on the insurance a car dealer will invariably find a suitable Company for you. Alternatively, if you have a good deal of other insurance such as life, house and business premises, etc., your Company will often quote a reasonable premium rather than lose your other business! The following are some of the questions and answers which have been prepared by the British Insurance Association to give the Insurers’ point of view on sports-car insurance.
Q. Why are insurance premiums higher for sports cars?
It is unfortunately a fact that sports cars—as a class—do tend to be more vulnerable to accidents than other models, and this is one of the fundamental considerations facing insurers. Evidence of this vulnerability comes from both official and insurance sources as mentioned below. For example, in a study of fatal and serious road accidents which was published in 1960, the Road Research Laboratory found that some makes of sports car had a particularly high accident rate. Statistics showed that one representative make of sports car had a rate of serious and fatal accidents of 37.8 per 1,000 vehicles licensed, compared with between to and 15 per 1,000 for saloons. [This is not fair as one could probably quote a single make of saloon car which has similarly bad figures—Ed.]
Insurers have also found from their statistical information that the claims costs for sports cars as a class are markedly higher than average. A five-year survey carried out by a leading group of insurance companies, based on their own experience, has shown that the annual rate of claims for saloon cars on their books was 15% with an average cost per claim of £40. The claims rate of sports cars was 24% with an average cost per claim of £74. These figures refer only to accidental damage to the vehicle insured and do not include third party claims or claims for fire, theft and personal injury. [It would be interesting to see the exact models which Insurance Companies consider to be sports cars—Ed.]
A point which is not always realised by sports car owners is the fact that there is not an automatic leap from saloon car to sports car premiums. The performances of all cars offered for insurance are carefully studied by underwriters. Thus, a Mini-Cooper is likely to attract a higher premium than a Mini-Minor, and a standard saloon which has had its power unit treated to a major conversion in order to give a higher performance may also be liable to a higher premium. [But would an Insurance Company lower its premium if a car was de-tuned?—Ed.]
Motor insurers feel, therefore, that it is reasonable that sports car owners, again as a class, should expect to pay sufficient in premiums to offset the claims cost which they produce. A policyholder wishing to insure a saloon model would justifiably be aggrieved if he thought the premiums he paid were being used to subsidise the insurance of sports cars.
Q. Do the Insurance Companies recognise that an experienced driver with a high performance car is a better than average risk?
The underwriting of sports cars is carried out on a highly individual basis, and every owner of such a car may be assured that the fullest thought is given to his own particular driving experience and skill before a premium is quoted. As a result, all sports car owners are not called upon to pay the same amount for their insurance, for the classification is broad enough to allow substantial variations in the premiums quoted, and many sports car owners in fact pay normal or near normal premiums.
Motor underwriting is based on an individual assessment of the risk involved In quoting a premium, the underwriter considers in conjunction two sets of facts—those relating primarily to the car and those which reflect the driving of the person at the wheel. Whilst statistical information will give a guide to the experience which can be expected on a particular set of facts, it is the individual assessment of the proposed risk that will ultimately determine the rate of premium and terms of insurance to be quoted. In quoting a premium for a sports car, therefore, the underwriter will pay particular attention to the personal characteristics of the driver (or drivers) especially age, accident record, and sports-car driving experience.
Q. What is the objection to young drivers?
Premiums quoted for some sports-car owners are above-average because the driver is young. The question of a driver’s age is considered where any car is concerned, and a young driver will usually he expected to pay a higher premium than applies in the case of an older person because experience has shown that the younger driver is a greater risk. The inherent risk involved in insuring a young driver is magnified where a car specifically designed to give a high performance is concerned. A motorist with a number of years’ driving experience, and a good history as far as his insurance company is concerned, should not find that the transition from saloon-car motoring to sports-car driving is very expensive from the insurance point of view. On the other hand, someone who has just obtained a licence, has been driving for a comparatively short time, or has a poor claims record is certain to find these factors reflected in the premium he is charged for a sports-car policy.
It is worth noting, though, that when a driver changes from a saloon model to a sports car, insurers consider the initial risk will in general be greater. Fifteen or twenty years’ driving experience with a family saloon does not automatically mean that a driver is suited to a more potent sports model, and insurers take this into account when looking at the risk.
Q. Is there a “closed shop” in regard to the insurance of sports cars?
Insurance of all kinds—including motor insurance—is available in a fully competitive market. If some companies feel they can safely quote lower premiums for sports cars they will do so in order to increase their business at the expense of other firms. But no insurer in fact does this for long. It is significant, that all insurers basing their decisions on their own experience, make it point of charging higher premiums and imposing special conditions when they are asked to accept a sports-car risk—at least until they have got to know their client (and his sports-car driving ability) very well indeed.