Factors that affect car insurance

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

Published

28 Sep 2018

9 things that affect your car insurance

When shopping around for car insurance quotes, companies will look at a lot of things to work out your premium. They’ll look at things like your age, job, your car’s yearly mileage and claims history.

Part of this calculation is to get a feel for how risky you might be as a driver. For example, a new driver with very few miles on the clock doesn’t have much of a driving history, so it’s unclear if they’ll be a safe driver, or prone to accidents and claims.

1. Your age

Car insurance companies will look at your age, as 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. Your location

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

Similarly, if your car is going to be parked in an area with a high crime rate, insurers may consider your vehicle more likely to be being broken into – and this could drive up the cost of your policy.

3. Your Job

Whether your car is used mostly for work or just the occasional drive into town, insurers will look at your occupation and job title when weighing up the cost of your policy. People in certain jobs that require more long distance or night time driving, for example, can be seen as riskier to insure. This can mean more expensive premiums than people driving less miles for work during the day, which are typically seen as lower risk.

4. Your insurance policy

‘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 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 will also be considered a higher insurance risk.

On the flip side, smaller vehicles that don’t use much fuel will nearly always be the cheapest to insure.

6. Your driving history and experience

Your driving history can affect the cost of your insurance. Drivers who have just passed their test won’t have as much experience on the roads, so are likely to pay more for their insurance.

Similarly, if you’ve been in a number of accidents over a short space of time, then this could result in a higher 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.

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 how or where the car is driven. For example, if your car is used for a 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 make car insurance more expensive if they think the vehicle could be broken into, making them more likely to have to pay out. 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 your insurance

Drivers who pay a year's cover up front, rather than in monthly instalments, will save money as they won’t be charged interest by the insurer. Your costs may go up if you have a poor credit rating, as those with a low credit score are statistically more likely to make a claim.

Does gender impact your car insurance?

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

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.

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