The price of car insurance in Italy and the bonus-malus system
The price of insurance in Italy varies based on the driver's bonus-malus class and the additional coverage requested.
What are the bonus-malus classes?
The bonus-malus classes are a system composed of 18 classes that vary based on the number of at-fault accidents the insured party has had throughout their insurance history. The first class corresponds to the minimum premium, while the 18th class corresponds to the maximum premium.
A new policyholder starts in the 14th class. Each year without at-fault accidents, the policyholder moves up one class, while in the absence of accidents, the bonus-malus class decreases by two positions. Additionally, the price of car insurance varies based on the policyholder's personal information, city of residence, and the type of insured vehicle. To save on the annual insurance premium, one can request the application of the "Bersani Law": if there is already a family member living in the same household with a lower bonus-malus class than the 14th class (the starting class), the new policyholder can automatically request to take on the family member's bonus-malus class.
How much is car insurance in Italy?
First-time policyholders start in the 14th class, and the average price of an insurance policy for a resident of a major Italian city ranges from €1000 to €1500.
Policyholders in the first class who choose basic third-party liability coverage pay approximately €300-€500 per year.
Those in the 18th class, at the bottom of the list, may end up paying €2500-€3000 per year.
Car insurance companies in Italy also offer the option to divide the payment into two instalments. The semi-annual payment works as follows: an annual insurance contract is signed, and the payment is split every six months. However, the insurance contract is still valid for a year, and as a result, the policyholder is obligated to pay the second instalment for the following six months.
Another cost-saving method for insurance policies is to insure the vehicle only for certain months of the year. If there is a need for a policy with a duration of less than a year, some insurance companies allow the suspension and subsequent reactivation of the policy. This means that the annual premium must still be paid, but the policy is used only during the required period, and suspended when not needed. For example, if a policy is needed for only four months from May to August, it can be easily suspended in September and reactivated for the remaining months of the following year. This allows for significant savings as the insurance policy is utilized only for the necessary period. Insurance companies typically allow a maximum of two policy reactivations.
Some companies may charge a small fee of €10-€20 for the suspension/reactivation, while others reactivate the policy without an additional cost.
The average cost of car insurance in Italy
Car insurance is mandatory in Italy for all vehicles present on public roads. The only exception where insurance is not required is when the vehicle is parked or stored in a private area and clearly can’t circulate on public roads. The average cost of insurance in Italy varies based on several factors, which we will describe here.
Age of the driver
The age of the driver is an important factor in determining the annual premium of the insurance policy. Younger drivers tend to pay more compared to older drivers because, due to their limited driving experience, they tend to cause a higher number of accidents compared to more experienced drivers.
Type of vehicle
The type of vehicle being insured affects the cost of the policy. Smaller utility vehicles for daily use have lower premiums. As the power of the vehicle increases, expressed in terms of horsepower, the price of the insurance policy also increases. However, this variable has a significantly smaller impact compared to the other factors listed in this article, unless it concerns sports cars.
Residence of the policyholder
The municipality of residence of the policyholder is another crucial aspect that determines the price of the insurance policy. The area where we live regularly determines a higher or lower risk coefficient in relation to the possibility of having accidents with other vehicles. Typically, those living in a major Italian city will pay a higher annual premium compared to those living in smaller towns or remote areas with low population density.
Additional coverage
Another factor that influences the cost of car insurance is the additional coverage requested at the time of contract signing. Among these, for example, are fire/theft insurance, roadside assistance, legal protection, physical injury insurance for the driver, and many others.
The average cost of basic third-party car insurance in Italy for an insured individual who has never had a policy in our country ranges from 900 to 1600 euros per year.
Insurance companies often offer the option to pay in instalments every six months. If the insured individual chooses to divide the payment semi-annually, the policy experiences a slight price increase of about 5%.