What affects your car insurance premium?

Lots of factors can affect car insurance rates, and knowing which ones might impact you could help keep your costs down. Read on to find out what to look out for.

When you apply for car insurance, the insurer will look at everything from your age and occupation to your car’s annual mileage and claims history. This helps them decide how high a risk they expect you to be as a driver as well as how much a claim might cost.

    Factors that can affect your car insurance cost

      1. Your age

      Car insurance companies look at your age because it can give them an idea of how experienced you are behind the wheel. Younger drivers may be more prone to accidents and car insurance claims, so are likely to pay more for their policy.

      In fact, government statistics say drivers under the age of 21 are 10 times more likely to have an accident than someone aged 35 or over. Similarly, drivers aged over 65 are also considered higher risk – which can lead to higher premiums.

        2. Where you live

        Where you live can also affect how much your car insurance will cost. If you live in a busy city centre, you might be considered more likely to have a crash or a bump with another car.

        Insurers also factor in the crime rates of different areas and the likelihood of your car being broken into while you’re parked. These risks are determined by postcode, meaning a person on the next street with a different postcode could pay less.

          3. What you do for work

          Whether you’re planning to use your car regularly for work or not, insurers will look at your occupation and job title when weighing up the cost of your policy. Certain occupations can be seen as safer to insure and will most likely receive lower car insurance premiums. On the other hand, jobs that typically involve a lot of driving might push your premium up.

            4. The type of policy you choose

            ‘Third-party only’ is the most basic type of car insurance and is usually the cheapest, while comprehensive cover is usually the most expensive. As a general rule, the price of your policy will reflect the level of damage and number of claims your insurer is expected to cover.

            It is important to remember that costs will vary depending on the policy and the insurance provider. Also, different providers may calculate your circumstances in different ways.

              5. Your driving history and experience

              Drivers who’ve only just passed their test are likely to be looked at as a bigger risk than those who’ve been driving safely for a long time. The number of accidents or previous claims you have on your record can also drive up the cost of your premium.

              If you’ve made a claim recently, received points on your licence or been convicted for driving offences, then these factors could all result in you having to pay more for insurance. On the other hand, you could see your overall cost go down if you don’t claim for a long period of time and build up a no claims discount.

                6. The make and model of your car

                Cars with more powerful engines and faster top speeds are typically considered to be higher risk and more expensive to insure than smaller, less powerful cars.

                Insurance companies will also consider how hard it is to find replacement parts for your car. If you drive a model that needs parts that aren’t readily available, it may push the price of your insurance policy higher. If your car has been modified, even if the changes are only cosmetic, you may also be considered a higher insurance risk.

                  7. Your car’s mileage and expected use

                  The longer a car is on the road, the more likely it is to be in an accident. When car insurers are calculating your cost, they may look at your car’s mileage to determine how much risk is involved.

                  They’ll also consider where the car is driven and how you’re expecting to use it. For example, if it’s for your daily commute, it’ll be spending more time in rush hour traffic, which puts it at a higher risk of being in an accident.

                    8. Your car's security

                    Insurance companies might increase car insurance premiums if they think the vehicle could be broken into relatively easily. If a car is kept in a secure location like a garage, this could mean you pay less.

                    Similarly, if the vehicle has an approved alarm or immobiliser, which acts as a deterrent to thieves, this might lower the cost of your insurance.

                      9. How you pay for your insurance

                      Drivers who pay a year's cover up front, rather than in monthly instalments, will save money, as they will not be charged interest by the insurer. A poor credit rating could also increase the cost, as statistically those with a low credit score are more likely to make a claim.

                        Does gender impact your car insurance?

                        As of December 2012, gender can’t be considered as a factor for car insurance rates. Previously, women could get cheaper car insurance than men, but today gender won’t be considered when car insurance companies are calculating your premium.

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                          Important information

                          The content on this page aims to offer an informative introduction to the subject matter but does not constitute expert financial advice specific to your own situation. All facts and figures were correct at time of publication and were compiled using a range of sources.

                          You'll find complete details of the cover, monetary limits, exclusions, excesses and terms in our policy documents.