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How does our pricing work?

Like all insurers, our underwriter looks at a number of rating factors when calculating the cost of your insurance and your suggested risk, compared to other drivers. The biggest determinants of risk in our insurance model are:

  • Age
  • Vehicle insurance group
  • Location of the vehicle
  • Claims and Convictions

So, by taking the factors above for 2 individuals aged 22 and 40:

22 year old

  • Driving an insurance group 40 car (Porsche Boxter)
  • Has 3pts for speeding, but doesn’t have any claims
  • Has held his licence for 55 months

40 year old

  • Driving an insurance group 1 car (VW Up!)
  • Located in a safe rural area
  • No points, no claims
  • Has held his licence for 20 years

Here is an example of how their insurance could be priced using fictitious multipliers for 1 hour of cover:

Factor Multiplication factor 22 yr old insurance group 40, location 16, 3pts, no claims licence held for 1yr 40 yr old, insurance group 1, location 3, no points, licence held for 20 years
Base premium (1 hour) NA £5 £5
Age (19 – 60) 1 – 2.2 £5  x 2.2 = £11 £5 x 1 = £5
Licence held .6 – 1.8 £11 x 1.8 = £19.8 £5 x .6 = £3
Insurance group (1 – 49) .75 – 1.8 £19.8 x 1.8 = £35.64 £3 x .75 = £2.25
Location (1 – 16) 0.7 – 1.6 £91.08 x 1.6 = £57.02 £2.25 x .7 = £1.57
Claims and convictions 1 – 1.2 £57.02 x 1.05= £59.87 1.57 x 1 = £1.57
Total premium before IPT, commission & admin fee £59.87 £1.57

These are obviously extreme examples and most users would fall within a far smaller price difference bracket. In reality, there will always be a minimum premium which for Cuvva is currently £7.92 including IPT, commission and admin fees. In the future, we would like our pricing to rely on data rather than assumptions – driving behaviour will therefore be a major determinant rather than arbitrary factors like age.

Updated on November 12, 2018

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