Do postcodes affect car insurance?
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
Key takeaways
Car insurance providers take your postcode into account alongside factors like your age and occupation when setting premiums
Different areas in the UK will have different risk levels depending on things like crime and accident frequency
Living somewhere that insurers see as high risk will likely result in more expensive car insurance
Does my postcode affect my car insurance premiums?
Yes, your postcode is likely to affect the cost of your car insurance policy. This is because different postcodes in different regions of the UK will have varying risk profiles, and insurers factor in your postcode alongside a number of other details to calculate your individual risk.
They use this to calculate how likely you are to make a claim - and the more likely you are to claim the higher your insurance costs will be.
How does my location and postcode affect my car insurance?
Here's a breakdown of how various factors in your location can affect your insurance costs:
Crime rates: High vehicle-related crime areas may lead to higher premiums
Traffic and accident rates: Busy urban areas with more traffic can increase the chance of accidents
Parking security: Street parking increases risks compared to secure parking options
Fraudulent claims: Areas with a history of insurance fraud can affect everyone's costs
Socioeconomic factors: Certain demographic profiles can influence claim rates
Environmental risks: Prone to flooding or storms? This can hike up your premiums
Historical data: Past claim frequencies in your area can predict future risks
Road conditions: Poor roads or complex layouts can contribute to higher accident rates
Generally speaking you’ll find that less populated rural areas enjoy lower insurance costs compared to densely packed city centres. But it's not just about the number of people; it's about the associated risks that come with different areas.
What are postcode rankings?
Insurers in the UK sort postcodes into six groups as a way to rank them by their risk profiles - these groups go from A (the lowest risk and therefore the lowest premiums) to F (the highest risk).
Will changing my address affect my car insurance?
Changing your address is likely to affect your car insurance premiums, depending on where you move to. Moving to a high risk area will often see an increase in your insurance costs, such as a big city or urban area, while shifting to the countryside often sees your premiums go down.
But it’s not just your postcode that can affect your premiums when you move - if your new home has higher security, such as a garage or driveway, this could bring your premiums down.
What if I have two postcodes?
Some drivers in the UK will technically have two postcodes, such as students or professionals with two homes. You should give your main postcode, where you spend most of your time and do most of your driving, to your insurer - even if it results in more expensive premiums.
Lying to your insurer about your main address is likely to invalidate your policy, so you won’t be able to claim when you need to.
Where in the UK is car insurance most expensive?
As you might expect, the region of the UK with the highest car insurance costs is London, with drivers paying on average £863[1] for a year of cover.
Region | Average premiums* |
London | £863[1] |
West Midlands | £680[1] |
North West | £611[1] |
Where is car insurance the cheapest?
Conversely, the area of the UK that saw the lowest average premiums was the South West, with drivers paying an average of £421[1] for car insurance.
Region | Average premiums |
South West | £421[1] |
Wales | £438.74[2] |
North East | £482[1] |
How can I reduce the cost of car insurance in high-risk areas?
Here are some of our best tips to reduce the cost of your car insurance, which can be particularly useful in high-risk areas of the country:
How you pay: Paying annually for car insurance is often the cheaper option. Providers will usually charge a little extra on top if you want to spread the cost out over monthly payments.
Voluntary Excess: Choosing a higher excess can lead to lower monthly costs.
Policy Features: Consider if you need extras like breakdown cover, motor legal protection, or cover for your personal belongings. Removing unnecessary add-ons can save money.
Comprehensive Cover: Fully comprehensive cover not only offers the most protection but is often the most cost-effective.
Telematics Policies: Young drivers can benefit from a telematics policy, which rewards safe driving habits with lower premiums.
Adding an Experienced Driver: Young drivers can also save by adding an older driver to their policy, but steer clear of fronting—it's illegal.
Compare car insurance quotes
One of the best ways to get a fair price for your car insurance is by comparing quotes with MoneySuperMarket. Just tell us a little about yourself, your car and the cover you need, and we’ll look for deals that meet your exact needs.
