So you just got a brand new car. Or you just started a new job that you have to drive to every day. Or, even better, you just retired and no longer have to commute to work. This means that your car is now for pleasure rather than commute or vice versa. In any case, when a major change occurs to the primary use of a vehicle, changes in car insurance premiums immediately follow.
Several factors directly affect car insurance premiums. Insurance companies compute for these based on things such as a driver’s age, gender, and experience. They also compute for these based on primary use. A vehicle’s primary use determines how often it is on the road, and therefore, how much the perceived risk is each time the vehicle operates. Insurance companies have different ratings for primary use, such as pleasure, commute, or business.
What Does “Pleasure” Mean for Car Insurance?
When the term “pleasure car” comes up, images of top-down sports cars zooming through the highway usually come up. But “pleasure” in this case does not refer to the type or model of the car. As a matter of fact, it can be a beat-up, rusty old wagon and still qualify as a car for pleasure. It is the vehicle’s day-to-day use that determines whether it is for pleasure or not. Do you use it to buy groceries for the household? Do you use it for shopping and running errands? How about weekend road trips? If you use a vehicle for these and other similar activities, then it can be rated for pleasure use.
Another way insurers determine whether it is a pleasure vehicle is through daily and annual mileage. Using a car less and driving it shorter distances results in lower mileage. Lower mileage means less use, and therefore, fewer risks for getting into accidents while using the car. Insurers then use these projections to calculate the premium.
What Does “Commute” Mean for Car Insurance?
Just like with cars used for pleasure, daily activity and total mileage determine whether a car is used for commuting. In-car insurance lingo, “commute” refers to driving to and from work or school regularly. If you drive a vehicle on a daily basis to and from work or school, then it is classified as a car for commute and not just for pleasure. Using a car this much also results in a higher count on your odometer. Insurers combine these factors and use them to calculate how much you will pay for your premium.
That said, different insurers have different definitions of what a “commute” is. Some consider it a commute when you drive part of the way to a mass transport system to get to work. For instance, if you drive to the train station, leave your car there, and take the train to work, certain insurers still count that as using your vehicle to commute to work. However, depending on the distance of the drive, other insurers may put it off as still using the vehicle for pleasure.
Other Ratings for Car Insurance
Apart from using a car for commuting or using it for pleasure, insurers also have other classifications which determine the primary use of a vehicle. It is helpful to know these things to get the best idea of which classification your car falls under.
Another common rating car insurance companies use is business. How is this different from commute? A vehicle used on behalf of a company requires business car insurance. It may be your own business or the business you work for. Either way, if the vehicle is used to conduct business, then it is more than a commuter car. Examples of this use include salesmen using the car to meet with clients, realtors driving to and from showings, driving passengers for payment, small business owners delivering wares to consignments, and the like.
In short, rating a car for business entails conducting business affairs with it, in addition to getting to and from the workplace. This may result in a whole different set of considerations when computing for a premium.
Cheaper Primary Use of Vehicle
All things considered, the primary use of a vehicle determines whether a policyholder will pay more or pay less for their coverage. The whole idea behind insurance, after all, is security against risks and reparation against accidents. Thus the potential risk involved when operating a vehicle defines how much coverage should be taken. What determines potential risk? Insurers use statistics to predict and anticipate the perceived risks involved when driving.
When it comes to the primary use of a vehicle, it is all about time on the road. The more often a car is on the road, the more opportunity there is to get in an accident. Add to that regular wear and tear that comes with using a car more often. In other words, with more time on the road comes more chances of needing repairs for one reason or another. And more need for repairs means making more claims.
This is why pleasure vehicles cost less to insure than vehicles for the commute. Less use and less time on the road results in lower risks and opportunities for accidents and breakdowns. The fewer potential claims you make, the less a premium you have to pay.
Primary use determines a car’s insurance coverage. A car’s use can predict perceived associated risks, and therefore predicts how much a car may cost over time. Pleasure vehicles, or cars used sporadically and only for leisure activities, have lower premiums because these spend the least time on the road. As such, there is a lower risk for accidents and repairs. On the other hand, cars used for commuting or driving to and from work/school have higher premiums because they are on the road more. More time on the road means cars are more at risk of getting involved in accidents. In the end, ratings and classifications are put in place to help car owners determine the most advantageous coverage for their needs.