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How is car insurance calculated

Find out how to calculate your car insurance cost

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Written by  Mehdi Punjwani
5 min read
Updated: 29 Sep 2022

Use our guide to work out how much you should be paying for your car insurance and why

How much will my car insurance cost?

It’s hard to say how much your insurance premiums will cost as there can be huge variances in price depending on your personal circumstances. However, you’re more likely to get cheaper car insurance if you choose a certain type of policy.


What is the cheapest car insurance policy type?

Fully comprehensive car insurance not only offers the most coverage, it’s usually also the cheapest. It’ll protect you against the cost of damage done to your car as well as a third-party, their car and their property.

How is car insurance calculated?

When you get quotes for a car insurance policy you’ll need to give us a few details so we can be as accurate as possible with our search. Some of these will help insurers decide how to set your premiums, such as:

  • Age:Younger drivers almost always face much higher car insurance premiums, as insurers see inexperience as a major risk factor. They counter this risk by charging you more for cover – but as you get older your premiums should eventually go down

  • Driving history: Even if you’ve been driving for a while, insurers want to know that you’re safe and responsible behind the wheel. If you have a history of making car insurance claims or you’ve got a few driving convictions on record, this also presents a higher risk to insurers – therefore you’ll likely pay more in premiums. As you might therefore expect, if you haven’t made any claims you might be eligible for a no-claims discount

  • Location: Some areas are viewed as higher risks than others due to factors like crime and burglary rates. If you live in a postcode in which your car is more likely to be stolen or vandalised, your car insurance will probably cost more

  • Occupation: Certain occupations may carry a higher risk of damage occurring to your vehicle – especially if it’s used for business purposes such as commuting

  • Your car: The actual car (or cars) you want to insure can also affect your premiums. Insurers sort makes and models into different insurance groups using a range of factors, such as power, top speed, security and availability of spare parts, and those in lower groups are usually cheaper to insure

How can I get cheaper car insurance?

There are a few things you can do to try and reduce the cost of your car insurance policy. When you buy a car, consider the following:

  • Make and model: You should never lie about your age or driving history as this can invalidate the policy you pay for, and it’s probably not worth changing your job or moving home to save money on your car insurance. However, if you’re in a position to choose which car you want before taking out cover, consider makes and models in lower insurance groups to try and get lower premiums

  • Your car’s security: It’s not always possible to modify your car, but if you can ensure it has factory installed locks and an immobiliser, the extra security will not only keep your car safer – it may also earn you cheaper insurance premiums

  • Drive fewer miles: If you can restrict the number of miles you drive you might be able to lower the cost of your car insurance, as quite simply the less time you spend on the road the less likely you are to be involved in an accident.

However as with all other information you give to your insurer you should try to be as accurate as possible or risk either paying too much for cover you don’t need, or invalidating your policy if you need to make a claim.

When you compare car insurance quotes, you can also consider the following actions to reduce the cost of your policy:

  1. Consider telematics: Telematics insurance is when your insurer installs a tracker in your car to monitor your driving habits, and it’s largely targeted towards young drivers who want to demonstrate responsible driving habits. It won’t offer discounts immediately, but by driving sensibly over time you can earn cheaper cover in the future

  2. Add a named driver: Young or inexperienced drivers can also benefit from adding a named driver with more years behind the wheel to their policy. The extra presence tells insurers you won’t be solely responsible for the vehicle, so they’ll lower the cost of the cover. However be careful of fronting – an illegal practice that can invalidate your cover and lead to a court case

  3. Pay annually: Paying in bulk for a year of cover might be an expensive initial outlay, but it generally works out cheaper than paying monthly

  4. Pay more excess: Volunteering a higher excess fee if you have the option tells insurers you won’t bother making small or frivolous claims

Compare car insurance quotes

Comparing car insurance quotes with MoneySuperMarket is a quick and easy way to find the right level of cover that's affordable. All you need to do is tell us a little about yourself, your driving history and the car(s) you want to cover, and we’ll search the market for a list of quotes tailored to your needs.

You’ll be able to compare deals by the overall monthly and annual premiums, the level of protection you’ll get and the excess you’ll need to pay to make a claim. Once you’ve found the one you want, just click through to the provider to finalise your purchase.

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