How is car insurance calculated?

Posted by on September 15th, 2015

Car insurance prices are calculated in different ways but there are lots of factors that never change and will always influence your premium. 

Regardless of what type of vehicle you’re looking to insure, the following factors will influence your premium more than others:

  1. Age

If you’re young in the eyes of insurers (aged 16-24) you will always pay more for your insurance. That’s based on risk, which is based on accident data that shows that young motorists are more likely to be involved in an accident and make a claim than any other age bracket. That being said – it doesn’t mean you should pay more than you have to, if you’re a young driver. So, take a quick look at our handy guide to cheap car insurance for young drivers.

The other side of the coin is that the older you are, the lower your insurance premium should be, generally.

  1. Address

Where you live and where your car lives will influence your insurance price because insurers use crime statistics to decide how much they charge.

If you’re fortunate enough to live in an area with low vehicle crime, your insurance premium should be lower than if you lived in a postcode where vehicle theft and crime is high.

  1. Where your vehicle is kept and security

If you park your car on a street, without an immobiliser or lock, you will pay more than somebody who keeps theirs locked in a garage.

Insurers are thorough and will have a list of approved locks and security measures, if you have these in place your insurance should reduce.

Renaultsport Twingo in white with black alloys

  1. Your vehicle and its insurance group

Regardless of what type of car you have, its value, desirability and power will have a massive impact on how much you pay for your insurance.

A top of the range £100,000 super car will cost more to insure than a low emission £7,000 hatchback.

That’s because it will be more powerful and more expensive, meaning it’s going to be more expensive to repair or replace following a claim. It’s also more desirable to thieves.

At the same time, an old car may not be as cheap to insure as you think because it’s arguably easier to steal.

Whatever car you drive, it will have an insurance group which also influences your insurance costs. The lower the number of the group your car is in, the less you have to pay.

  1. Type of cover

There are different types and levels of car insurance and some cover you in more eventualities than others.

Comprehensive insurance covers you for pretty much every eventuality and costs more because there are more potential times that your insurer could pay out in the event of a claim.

Third Party Fire and Theft cover is the middle form of car insurance for UK drivers.

Third Party Only cover is normally cheaper because there are fewer opportunities for you to make a claim.

  1. Use and mileage

If you use your car for business as well as social, you will pay more than somebody who only uses their car for social use.

That’s because you’re likely to be on the road during heavier traffic more than somebody who drives socially.

In the same way, the higher your annual mileage, the higher your premium, again because you’re on the road more and therefore more at risk than somebody who drives fewer miles.

Volkswagen Scirocco in white

  1. Excess

There are two types of excess on car insurance policies: voluntary and compulsory.

Your compulsory excess is decided by your insurer and must be paid in the event of a claim.

Your voluntary excess is decided on by you and your insurer, essentially it can be as high or as low as you want but the higher your voluntary excess the lower your premium, usually.

  1. No Claims and a clean licence

If you have a clean driving licence and a No Claims Bonus you will pay less for your insurance than somebody who has made lots of claims or has convictions.

  1. Other drivers or riders

Having other named drivers or riders on your policy can make your insurance more expensive sometimes.

  1. Length of your policy

Short-term policies will be more expensive per day than standard 12-month policies.

How do I get cheap car insurance?

All ten of these factors will influence how much you pay for your car insurance policy; they are unavoidable.

That’s why it’s important to search and compare as many prices as possible to make sure you get the cheapest quotes and a policy that suits you.

That’s where can help you because we compare car insurance prices from some of the leading insurance brokers in the UK.