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Car insurance and postcodes

Does your postcode affect car insurance premiums?

published: 05 June 2020
Read time: 5 minutes

Insurers take a number of factors into account when they set your car insurance premiums – and your postcode is one of them. Find out why this matters to insurers, and where cover is the cheapest in the UK

Why does my postcode affect the cost of car insurance?

Insurers calculate your premiums based on your risk factor – in other words, how likely you are to make a claim on the policy you take out. They’ll consider a number of things when deciding this, one of which is your location.

This is because different parts of the UK have different risk factors, which is based on:

  • Population density

  • Traffic density

  • Crime rates

  • The number of claims made in the area

  • The number of road accidents in the area

  • Whether the area has higher-risk road systems like roundabouts or cycle lanes

Because of the reasons outlined above, you would expect areas with lower populations – rural areas, for example – to have lower average premiums than inner city areas. It’s therefore no surprise that the cheapest area in the UK for car insurance is Dorchester, while the most expensive area is East London.

Family in a car

Where are the cheapest areas for car insurance in the UK?

Four of the five cheapest areas in the UK for car insurance are in the south-west, with Dorchester seeing the lowest average premiums at £340 a year. This is followed by Exeter, Truro, and Torquay – with Inverness in Scotland making up the list.*

Based on fully comprehensive car insurance policies for one driver holding a full UK licence. Data collected by MoneySuperMarket between January and March 2020, accurate as of June 2020

Where are the most expensive areas for car insurance in the UK?

By contrast, all five of the most expensive areas in the UK for car insurance are in the capital, with East London heading the list – average premiums for car insurance here are around £972. Ilford and Barking followed, then North-West London, Southall and Uxbridge, and North London.*

Based on fully comprehensive car insurance policies for one driver holding a full UK licence. Data collected by MoneySuperMarket between January and March 2020, accurate as of June 2020

How else can I get cheaper car insurance?

Whether you live in a postcode with higher premiums or lower premiums, you can still benefit from a range of other ways to cut the cost of cover – whether it’s making changes to your policy or the way you use your car.

Before you take out car insurance, consider the following aspects of your policy to get a cheaper quote:

  • How you pay: Paying annually for car insurance is often the cheaper option, as providers will usually charge a little extra on top if you want to spread the cost out over monthly payments

  • Pay a higher excess: Increasing your voluntary excess indicates that you won’t bother making small or frivolous claims, for which insurers will usually reward you with a discount

  • Strip down your policy: Car insurance policies can come with a range of features, such as breakdown cover, motor legal protection or cover for your personal belongings. If these aren’t included as standard, you’ll likely need to pay extra – but if you don’t need them, you can save a few quid by avoiding them

  • Choose fully comprehensive cover: Fully comprehensive cover offers the most complete protection of all your available options – and on top of that, it’s also usually the cheapest

  • Consider telematics: If you’re a young driver, consider going for a telematics policy. Your insurer uses telematics to monitor your driving habits – and if you drive safely and sensibly you’ll earn a discount on your future premiums

  • Add an experienced driver if you’re young: You can also benefit from adding an older driver, such as a parent or relative, to their policy – but be careful of fronting

  • Be honest: It’s vital to be honest and up-front when you take out a car insurance policy – this means being truthful about your location, your job situation, your vehicle and how you use it. If you’re caught being dishonest you’ll risk voiding your policy – meaning you’ll be driving without cover, which is illegal, and you’ll have wasted the money you paid in premiums

The car you drive is important too, as is the way you drive it – so keep in mind:

  • Cars in lower insurance groups are ranked so because they’re safer on the road and easier to drive – as such these makes and models are also cheaper to insure

  • Driving fewer miles puts you at a lower risk of being involved in an accident, simply because you spend less time on the road – the lowered risk factor means cheaper premiums

  • Keeping the car safe and secure, for example locked in a garage and equipped with an immobiliser, makes it less likely you’ll need to claim for theft or vandalism – and as above this means insurers will generally charge less for cover

  • Modifying your car can increase your premiums – and in some cases it can be hard to find cover at all. This is because modified cars might need parts that are harder to find or more expensive to repair – therefore you’ll need to pay more for insurance

  • You can build up a no-claims discount over time by avoiding making any claims on your policy. Doing so can earn you a discount on your car insurance, which you can usually transfer between providers – and you can insure this discount too

Compare affordable car insurance quotes

Finding affordable car insurance is quick and easy when you compare quotes with MoneySuperMarket. Just tell us a little about yourself, your driving history and the car you want to insure, and we’ll search the market for a list of quotes tailored to your needs.

You’ll be able to compare policies from a range of providers by the overall annual and monthly cost, the cover you’ll get and the excess you’ll need to pay to make a claim. Once you’ve found the deal you want, just click through to the provider to finalise your purchase.

As with any insurance product, keep in mind that the cheapest option isn’t always the best. You should try to get the amount of cover you need for the best price available, so you know you won’t be over- or under-insured.

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