5 Factors that a Car Insurance Company hides from you

There are many factors that insurance companies hide from insurers. Whether you accept it or not they may be secrets undisclosed and you will not be able to know them. We are going to make you aware of these factors so that you can have a better understanding of the functioning of the insurance policy. 

1. Car Model will affect your insurance premium

Many car insurance companies do not reveal the secret that a car model will have an effect on the insurance premium. The car insurance company will not tell you this secret. There is a rating mechanism for each car and car model type. The car insurance companies make calculations according to these rating systems and the insurance premium amount is finalised. 

Car insurance companies premiums are normally calculated based on the car model. High-end car models have a high premium. Before buying a new car do research on different insurance companies insurance premium amounts on the car models. You can compare the quotes online to get an understanding of the car insurance premium for different car models. 

2. Special discounts are offered to the wealthy

Rich people have good financial back up and they have the ability to face losses. They have more assets and it will serve them better to protect against any unforeseen events. Rich people need more protection and they have a greater need for higher insurance. 

They have more coverage limits on the insurance. For insurance companies, it is more profitable for doing such business. Insurance companies offer umbrella insurance, boat insurance and life insurance. There are more profitable types of business. These insurance are not offered to low-income individuals. 

3. Quick Claims

Quick claims and settlements are subject to the risk associated with the insured. If it is in the best interest of the company then quick claims settlements are offered by the insurance company. If there is an element of risk associated with the claims or there is anything legal involved in the event of loss then the insurance companies will not provide quick claims.

The subject will be into the legal jurisdiction and quick claims may not be offered to the insured. If the claims are lesser and the insurance company tends to make profits of the insured then the settlement can be done quickly. However, every claim settlement is subject to the event and different from case to case. 

4. Profits earned more on investments than premium 

The profits of the insurance company dictate how they do their business. Many people think that insurance premium is the main source of profit for the insurance company. This is not the fact but when you pay the insurance premium amount, the insurance company will invest this premium amount to work so that the company can make additional profits. 

If there are more investments then there are more profits for the company. If settlements are more for the insurance company then it will lose its investments. This is the main reason that Insurance companies put many restrictions, conditions on making claim settlements. Large claim settlements take the major share of their investments so the insurance companies take hard on while making the claim settlement. 

5. Underwriting 

To make huge profits in their business, insurance companies want mostly rich customers. Finding rich customers is very difficult. The insurance companies will target-rich customers and they find wealthy customers by underwriting methods. 

The techniques such as education, family background, house properties, wealth ownership, income status, employment status, social factors, economic factors and others. Rental and ownership status is also considered for deciding the premium. 

Insurance companies can make more profits if rich people take more insurance from their companies. If the wealthy customers take all their insurance requirements from a single company, then the insurance company will make more profits.