Car insurance is not just a legal requirement in Kenya—it’s your financial safety net on the road. But many drivers often ask, “Why is my car insurance premium higher than my neighbor’s, yet we both drive similar cars?” The answer lies in a process called underwriting. Underwriters are the behind-the-scenes professionals who assess your risk profile before determining how much you should pay for coverage. In this blog, we’ll explain how this process works, why your unique driving situation matters, and share a relatable Kenyan driver example to make it simple.
What Is Motor Insurance Underwriting?
Underwriting is the process an insurance company uses to evaluate how risky it is to insure you and your car. Think of it as a health check-up, but this time it’s about your driving habits, your car, and even your lifestyle. The underwriter’s job is to balance fairness—they want to make sure your premium reflects your actual risk level while ensuring the insurer can cover claims when accidents happen.
The Relatable Example: James and His Toyota Axio
Meet James, a 32-year-old Nairobi-based driver who owns a Toyota Axio. He drives daily from Kasarani to Upper Hill for work, covering about 40 kilometers each day. When James applies for car insurance, the underwriter doesn’t just look at the fact that he owns a Toyota Axio. Instead, they analyze several other factors that could affect the likelihood of James being involved in an accident or making a claim. This assessment is what shapes his premium. Now let’s break down the factors.
Your Age and Driving Experience Matter
Underwriters pay close attention to age and experience. Statistically, younger drivers (especially under 25) are more likely to take risks, leading to higher accident rates. James, at 32, has a good advantage because he is considered more mature and less risky than a 20-year-old driver. But if James had only been driving for two years, his lack of experience might still push his premium slightly higher.
The Car You Drive Says a Lot About Risk
Not all cars are viewed equally by underwriters. Factors like the car’s engine size, model, repair costs, and popularity among car thieves influence how much you pay. James’s Toyota Axio is known to be fuel-efficient and relatively affordable to repair. That works in his favor. However, if he were driving a high-end Mercedes-Benz, his premiums would likely be higher because of expensive spare parts and increased theft risk.
Where You Live and Park Matters
Location plays a surprisingly big role in underwriting. If you live in a busy area like Nairobi, Mombasa, or Kisumu, where traffic is heavy and accident rates are higher, you’ll likely pay more than someone in a quiet town like Nyeri. James parks his car at a secure apartment parking lot at night, which reduces risk. If he parked on the roadside regularly, his insurer might raise his premiums to account for higher theft or vandalism risks.
Your Driving History Can Work for or Against You
Underwriters also look at your driving record. If you’ve had accidents, traffic violations, or claims in the past, it signals a higher risk. Luckily, James has had a clean record for the past five years, which works in his favor. Some Kenyan insurers even reward safe drivers with lower premiums or bonuses at renewal.
The Purpose and Frequency of Use
How you use your car matters just as much as what car you drive. If your vehicle is for personal use, your premiums will be lower compared to someone using their car as a taxi or for ride-hailing services like Uber or Bolt, where the car spends long hours on the road and faces higher accident risks. James uses his car mainly for commuting, which is considered a moderate risk. If he used it for long-distance courier services across counties, the underwriter would rate him a higher risk.
Car Modifications and Accessories
Adding non-standard modifications like powerful sound systems, turbo engines, or flashy rims may look cool, but they also increase your insurance costs. Why? They either make your car more attractive to thieves or increase the cost of repairs after an accident. Fortunately for James, he has kept his Axio fairly standard, which helps keep his premiums reasonable.
The Type of Cover You Choose
In Kenya, you can choose between Third Party Only (TPO), Third Party, Fire, and Theft (TPFT), or Comprehensive Cover. Each has its own pricing structure. James opts for comprehensive cover, which protects him against accidents, theft, fire, and third-party liability. The premium is higher compared to TPO, but the peace of mind is worth it. Underwriters calculate his risk and premium based on this choice.
Why Honesty Is Crucial During Underwriting
When applying for car insurance, you might be tempted to leave out certain details—like how often you use your car or where you park it—to try and lower your premium. But dishonesty can cost you later. If James, for example, claimed he only uses his car for personal errands but was later found using it for Uber without disclosing it, his claim could be rejected. Being transparent ensures your cover remains valid when you need it most.
How Underwriting Protects Both You and the Insurer
Underwriting isn’t about punishing drivers—it’s about balance. Imagine if everyone paid the same flat rate regardless of their driving behavior or car type. Safe drivers like James would end up subsidizing reckless drivers, which wouldn’t be fair. By assessing risk individually, underwriters make sure your premium reflects your reality. This way, the insurer stays financially stable, and you get reliable protection.
The Future of Motor Insurance Underwriting in Kenya
Technology is rapidly changing how underwriting is done. Telematics (tracking devices installed in cars) are becoming popular worldwide and may soon be introduced in Kenya. These devices monitor driving habits like speed, braking, and mileage, allowing insurers to price premiums based on actual driving behavior rather than just statistics. For safe drivers, this could mean significant savings. Additionally, digital platforms now make it easier to apply for and renew policies online, with faster risk assessments.
Policyholder Takeaway
As a driver in Kenya, understanding how underwriters assess your risk puts you in control. Your age, driving history, location, car type, and usage all influence how much you pay for insurance. The good news is that by driving safely, maintaining your vehicle, and being honest with your insurer, you can enjoy fair pricing and reliable protection. Just like James, who benefits from his clean driving record and careful lifestyle choices, you too can keep your premiums reasonable while enjoying the peace of mind that comes with proper coverage.
