Most policies issued are considered to be standard that follows the industry practices and guidelines. This also extends to vehicle usage assumptions. If you don’t tell insurers your exact situation, they will calculate the premiums based on a typical driver, which may mean you don’t take advantage of the discounts you could qualify for based on your current vehicle utilization. Or you may be penalized for some of the details entered on a proposal form without even being aware of it.
There are many ways certain restrictions can be applied on a vehicle insurance policy in order to reduce the premiums or avoid paying more for things that aren’t needed or relevant. As long as you can comply with the new terms and conditions, you may enjoy the savings offered. At times motorists may even be forced to take these measures to keep the rates affordable.
Applying upper mileage ceiling is the most common way of taking advantage of the limited use you are getting out of your automobile. If you are travelling less than certain miles a year you can inform the carrier of this fact. Then, they go ahead and offer you cheaper car insurance rates and place a limit on your yearly driving distance.
Usually driving less than 7,000 miles a year qualifies motorists for large discounts. The idea is simple. If you don’t drive as much as a typical driver (about 13,000 miles a year) your rates shouldn’t be based on the assumptions that you do as much as everyone else. Many people can benefit from this approach as there are more people working from home these days. Besides, you don’t naturally drive more when you are older and so on.
The above limitations are taken a level further when you own a classic automobile and it hardly ever leaves your garage. You really can have great classic automobile insurance rates when you drive less than 3,000 miles a year. Most people don’t use them as their daily rides. They are taken out for pleasure use once in a while. It is usually a standard approach to place upper limits on vintage vehicle policies.
There are policies that are geared to people who don’t drive to work with their automobiles. Such coverage doesn’t necessarily completely forbid people from commuting to work once in a while but the policyholder clearly states that it isn’t used for such purpose ordinarily. Leisure (or pleasure) use car insurance is ideal for stay-at-home parents and people who take the train to work.
Otherwise, you may end up paying a lot more if the insurer bases your premium calculations on the assumption that every working day you travel to your work which is miles away from your home during rush hours. You can see the reasons behind higher or lower rates when you consider the risks associated with your routines.
Listed Drivers Only Policies
A standard policy has provisions for occasional drivers, who may borrow your automobile on the off-chance. If there are no restrictions, they can even include teenagers. Some policies make a point of stating that only people over a certain age can borrow your automobile. This is usually people over the age of 21 or 25.
This is usually done to reduce vehicle insurance premiums. And at times, it may be necessary to bring down the cost of insuring a high-risk performance car to affordable levels. Such coverage usually comes with either no occasional driver coverage or with age restrictions.
This is the next level and allows policyholders to exclude certain drivers in their household from driving the insured vehicle. Again, a standard policy assumes that everyone in your household has access to the vehicle and therefore their details are taken into account when calculating premiums.
And premiums would go up a lot when this person is a high-risk driver like a teenager or someone with bad claims or traffic records. So, it may be an option to explicitly exclude such a person from driving and being included in premium calculations. Once you set such a condition, you must make sure that it is followed because an excluded person wouldn’t have any coverage.
Most companies would only agree to excluding a driver if they have their own cars and insurance. This could be really problematic when you just buy a sports car and your son or daughter has just passed their driving test. You may even be forced to lock it away or sell due to prohibitive costs.
No Business Use
Some companies may offer slimmed down auto insurance coverage at reasonable prices. In such cases, there could be some restrictions on the policies like no business use. Perhaps, a leisure only policy would have such clauses. So, it may be best to have a quick look at terms and conditions of your policy, especially when you know you get cheap car insurance in return.
Restricting usage, mileage, drivers and coverage is a way of reducing costs and at times making an impossible to insure risk to be possible. It is important to pay attention when arranging such policies because those conditions would be clearly written on the schedule and binding in case of a claim.