Ever wondered why everyone pays a different premium for their car insurance? It’s because the amount you are charged for cover is based on a statistical assessment of how much risk you pose.
The greater risk you pose of being involved in an accident or having your vehicle stolen, the more likely it is your insurer will have to pay out for a claim.
Someone with a very expensive and powerful car will generally pay more than somebody with a cheaper, less powerful car. Similarly, someone with 20 years’ driving experience will tend to pay less than someone who’s just removed their L plates because, statistically, an experienced driver poses a lower risk.
But these are only rules of thumb, and insurers take several other factors into consideration when setting your motor insurance premiums. At MoneySuperMarket we regularly crunch the numbers behind millions of car insurance quotes to analyse market trends and help you get an estimate on your premiums.
Our car insurance calculator
For example, data from our latest car insurance monitor shows that a woman from Blackpool aged between 25 and 29 would pay an average of £504 for cover, and a man from Telford aged between 40 and 49 would pay an average of £304.
Our motor monitor is based on data from October 2011 to November 2012. We have analysed the impact of age, gender and location on car insurance premiums to find out how much of a risk different groups are considered to be in the eyes of insurers. You can dig through our data and discover the average premiums faced by different groups using our car insurance calculator:
Why are these three factors so important?
We have focused on these three areas as they tend to be amongst the most influential factors when it comes to calculating car insurance quotes.
The gender element is particularly interesting because new piece of legislation from Europe. The European Court of Justice’s Gender Directive means that car insurance providers can no longer take the customer’s gender into account when they are calculating their premiums, despite the fact that women drivers are statistically less likely to be involved in accidents.
Until now, statistically safer female drivers were generally rewarded with lower premiums than men, but with the ECJ Gender Directive now in effect, the disparity between male and female premiums is disappearing. This will not be reflecting in our car insurance calculator yet as it is based on data prior to the introduction of the legislation. However, it is something to look out for in the future.
Age is still a big factor when it comes to motor insurance premiums, as older drivers are seen by insurers to be less likely to be involved in accident. Generally speaking, this is because older drivers tend to have more experience behind the wheel, whereas younger drivers tend to have less experience.
Those living in areas with higher crime rates also tend to pay more for cover. If your postcode is in a high-crime area, insurers will weight your premiums to account for the added risk of your vehicle being vandalised, damaged or stolen.
Bringing costs down
Bear in mind that our car insurance calculator only gives you the average price you can expect to pay. In reality, your premiums could be higher or lower. If they are higher, there are some steps you can take to help bring the cost down.
Opting for a lower level of cover can sometimes result in cheaper car insurance premiums. There are three levels of motor insurance cover: third party, third party, fire & theft, and fully comprehensive cover.
Third party only cover tends to be cheapest of the three options, because in the event of a claim, the insurer is only obliged to pay for damage caused to third parties and property. It does not cover the driver against fire, theft, or damage to their own vehicle or themselves.
Remember that although third party cover may be the cheapest option, were you involved in an accident you would have to pay for repairs to your own vehicle, so it may be a false economy.
Remember that although third party cover may be the cheapest option, were you involved in an accident you would have to pay for repairs to your own vehicle, so it may be a false economy
You can also choose to pay a higher voluntary excess in the event of a claim. Doing so typically earns you a lower premium as the insurer will be left with a smaller bill. However, you must not set your excess at a higher level than you can actually afford, because you will have to pay it in the event of a claim.
Where you live has a significant bearing on your premiums too, with higher-crime areas penalised by higher premiums. Of course, you’re not going to move house to get cheaper cover, but you can earn yourself discounts for making your vehicle more secure.
Keeping your car parked in a locked garage overnight and even installing insurer-approved security equipment such as immobilisers or steering wheel locks reduce the chances of it falling prey to thieves, and insurers should reflect this in their car insurance quotes.
Young or less experienced drivers can fight back against higher premiums in a few ways. First, driving safely and conscientiously will earn you a No Claims Discount on your future policies. Next, you might consider taking an advanced driving course to get more experience on the roads. Pass Plus, for example, helps young drivers to get cheaper premiums with some insurers.
Finally, you can add an older or more experienced driver to the policy as a named driver. In theory, having another driver on the policy reduces the amount of time you’ll spend behind the wheel and could therefore reduce your premiums if the insurer believes that the named driver is less likely to be involved in an accident.
A word of warning though; you must never have a more experienced driver ‘front’ your policy for you as the main driver to get cheaper cover – this is known as fronting and is illegal. If you’re caught fronting you could end up in court for driving without motor insurance.
Our car insurance calculator can give you an idea of what you can expect to pay, but follow these steps and you can earn yourself a better deal and feel epic.