Why do insurance prices change?

Recently, The Bike Insurer got a message over Twitter regarding a substantial change in quotes for one disgruntled rider.

Three months earlier, the rider in question had received a quote for a little over £400 but because it was the middle of winter, they decided not to buy their bike or insurance to avoid the worst weather of the year.

In March, they returned to The Bike Insurer and got quotes for the same rider, the same policy on the same bike and it was nearly £200 more expensive.

Obviously, the rider was aggrieved at this rise in price, essentially because they could not understand why the price had jumped so much but it’s part and parcel of insurance costs in any industry. Here, we try to explain why motorbike insurance prices vary.

Prices vary and fluctuate daily

If you’ve ever shopped around for insurance a couple of times in the same month, you’ll have noticed that the quotes returned vary.

Sometimes they’re more expensive and sometimes they’re less, and it seems something of a lottery as to whether or not it is cheap, reasonable or expensive. And to a certain extent, that’s true – sometimes you’re lucky and sometimes you’re not.

Why do prices vary?

Insurance is a multi-million pound industry and that means insurance brokers will constantly review and monitor their prices. And they do this well ahead of time to ensure that they’re not losing money or alienating customers with prices that are too high.

So the quote you receive in March will have been decided months before, it just takes a while to filter down to the customer because brokers use things called software houses.

What are software houses?

Software houses, as the name suggests, provide software to insurance brokers to determine the price of their policies. Insurers will give software houses their data to determine their prices and the software houses will then come back with draft prices.

Insurers then have to give their approval to the software houses and the prices they return – this all takes time.

What does this mean for me?

This means the prices you get are based on data from software houses and insurers from a few months earlier. They can be changed based on trends and hunches from months earlier and they can be changed at any time.

That means that the timing of your quote search can have an impact on the prices returned, however there’s no way of telling when is better as prices and data change all the time.

I received cheap quotes – what now?

If you receive a quote you’re happy with but you’re not quite ready to pay, you can usually return to that quote within 30-days. However if you miss out on that quote, you run the risk of getting a more expensive quote the next time around.

What’s the best advice?

The best advice is to compare prices from as many different insurance brokers as possible, and comparison sites, like The Bike Insurer are the best way at doing that.

When you receive a price you are happy you should get your hands on it as soon as possible. At The Bike Insurer we encourage riders to buy straight away, as waiting means you could miss out on the cheapest price.