Vehicle Recall: Its Effect on Insurance Rates

Insurance rates are calculated based on different factors. One of them is vehicle recall.

09:21 15 April 2013

When insurance companies calculate the premiums that car owners need to pay for their insurance policies, they consider a lot of factors. Is the car parked in a secured location every night? Does it have extra safety features? Does the owner make claims every now and then? Or he is a great, responsible driver who never made a claim?

Another thing that insurance companies take into consideration is vehicle recall. If your car was recalled, your insurance company may think that it has safety issues that can lead to accidents hence, claims. For this reason, your premiums may increase.

However, some insurance companies understand that in the event of vehicle recall, manufacturers are held liable if the accident is the result of the car’s defect. This means that should the car owner gets into an accident, the manufacturer can be forced to pay all the damages. For this reason, insurance companies save money as they don’t need to pay for anything. Insurance companies that understand this may even decrease your premiums.

One thing to keep in mind though is that it is crucial that you adhere to your recall notice. If your car was recalled, make sure to follow the instructions of the manufacturer. Normally, they will ask you to take your car to authorized service centers to fix the problem. If you do not adhere to this and you got involved in the accident, you will be held responsible.