How The Price Of Your Car Insurance Is Calculated

There are a huge number of different details about you that can affect the cost of your car insurance. Below are some of the biggest ones, but remember that every question an insurance company asks will have some bearing on your premium - after all, that's why they ask them.
Answering these questions over and over again can be really mundane so use our comparison tool, enter your details once, and get quotes from over 100 companies.

Factors that affect the price you pay

The car: Obviously, this makes a huge difference. For example, the more expensive a car is, the more it costs to replace, and also the more attractive it is to thieves. Each vehicle is also categorised into a car insurance group by the Insurance Group Rating Panel, based on a number of different factors including the cost to repair the vehicle, safety ratings and maximum speed. These groups range from 1 (the cheapest to insure) up to 50 (the most expensive to insure), and form a base around which car insurance companies build your quote.

Postcode: If you live in a city or town centre, insurers see you as a higher risk. Urban areas tend to have higher crime rates, so devices like alarms, immobilisers and trackers can help to decrease the added cost of your car insurance- which is even higher if you park on the street in these areas.
 
Age and Experience: If you're a newly qualified driver, under the age of 25, or both, you are deemed to be of a higher risk than other motorists by insurance companies, and as such you will have to pay more for the same cover. The younger and therefore less experienced you are, the more you should expect to pay; this also applies to any policies you are added to as a named driver.

No-claims history: It's simple: the less you cost your insurance company, the less they charge you. Most companies will give you a discount for every year you don't make a claim, usually up to a maximum of five - and this is transferrable across insures as well if you decide to switch.

Occupation: Your profession can alter the cost of your car insurance as well; for example a teacher will generally find cover to be cheaper than a taxi driver as the insurance company makes an assumption based on previous statistics as to how well that person will drive. Journalists, for example, will struggle to get cheap car insurance as it is assumed that their driving style will not be as safe as others.

Excess: This is how much your car insurance provider will expect you to pay before they will contribute to your repair bill. As a rule, the more money you're prepared to stump up yourself, the lower your premium - although there is a 'tipping point' where increasing your excess will not affect the premium.

Ways you can lower your car insurance premium

It is always worth checking how different insurers deal with no-claims discounts; most offer 30% discount for a year's no claims, increasing to around 65% after four to five years, but some will offer bigger discounts early on, or offer a larger discount for a clean five-year record.

Attending a special course such as the Pass Plus or Institute of Advanced Motoring course can save you money on your cover, as well as making you a better driver. Although these courses can be quite expensive, the saving made in premiums over the years more than makes them worth the initial outlay.

It is also worth shopping around for your cover each year; you can potentially save hundreds of pounds by changing insurers rather than automatically renewing with your current car insurance provider.