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Find out how much you should be paying for car insurance

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

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Calculating the cost of car insurance

When you take out car insurance, the insurance company normally gives you a quote based on the likelihood of you making a claim in the future. This is calculated through a statistical assessment of a range of factors, including your age, driving history, occupation, where you live, and details of your vehicle.

The higher the risk you pose, the more expensive your car insurance will be.

How much does car insurance cost?

The average cost of a fully comprehensive car insurance policy is £514, while it’s £818 for third party, fire, and theft, and £1,212 for third party cover on its own, according to MoneySuperMarket data from January to July 2018. The good news is that the average cost of a fully comp policy is down 10% from last year – the first time since 2014 where this number has fallen.

A graph showing the average cost of fully comprehensive car insurance

The average cost of fully comprehensive car insurance and how this has changed over time, according to MoneySuperMarket data from January – July 2018.

Not all drivers will pay this amount for their car insurance as the factors involved are different for everyone. For example, the average male aged 17-19 can expect to pay something in the region of £1,431.62 for a fully comprehensive policy, while the average female aged 40-49 is likely to receive a quote for nearer to £348.

It’s illegal for insurance companies to set their prices according to the gender of the applicant, but certain factors mean a price differential between men and women still exists – learn more with our guide to car insurance for women.

What affects the cost of car insurance premiums?

The amount you pay for car insurance will be influenced by:

Your age

Age is a big factor for insurers when they calculate policy costs. Although not all young drivers are completely new to driving, and not all older drivers have lots of experience, it’s still a statistical fact that younger drivers tend to have more accidents. This means that young drivers are generally viewed as a higher risk.

A graph showing the average cost of fully comprehensive car insurance by age

The average cost of fully comprehensive car insurance by age, and how this has changed over time, according to MoneySuperMarket data from January – July 2018.

Your postcode

Where you live can be important too, because living in an area with higher crime rates increases the risk of your vehicle being vandalised, damaged or stolen. So insurers are likely to check whether your postcode is in a high-crime area and, if it is, your car insurance premiums are also likely to go up.

Your occupation

Your job can affect your car insurance premiums because it can influence how, when, and where you’re likely to use your vehicle. For example:

  • A job that requires you to make long journeys in your car can increase the risk of you being involved in an accident as you spend more time on the road. This means you’re more likely to have to claim, so your premiums are likely to go up.
  • Jobs such teachers and those on the police force tend to have lower premiums as they are seen as pillars of society and more respectful to rules and regulations.
  • Sometimes minor changes to your job title can have a noticeable effect on your insurance costs – being a ‘company director’ might give you a higher quote than being a ‘director of a company’, for example. However you should always be accurate on your application, as otherwise your claim may be rejected.
  • Insurers vary with the levels of cover they provide, so it’s important to read your policy documents before taking insurance out. This way you know exactly what’s included in the cover.

Your vehicle

Providers can look at multiple features of your car to work out the cost of insurance, including:

  • Value: more expensive cars generally cost more to replace, and repairs can also be costly if the parts you need are rare or expensive.
  • Performance: cars with bigger engines will normally be faster and more powerful, and this can increase the chances of that vehicle being involved in an accident.
  • Modifications: some modifications can increase the value of your vehicle, especially those related to performance or aesthetics. You should let your insurer know if you have modified your car - if you don’t, you could invalidate your insurance.
  • Security: To insurance providers there may be more of a security risk associated with high-end cars, but improved security features can help to counteract this. How safe your car is seen to be can depend on gadgets such as alarms and immobilisers, as well as the place you keep the vehicle when it’s not being used – whether you park it in a garage or on the street.
  • Usage: if you use your car a lot and have a high annual mileage, or if you use the car for commuting, this could increase your premium as you’re at greater risk of having an accident. This is especially true if you’re driving on busy roads or motorways.

The type of vehicle you have also has an impact on the premiums you pay for car insurance. Vehicles are generally sorted into groups, depending on a number of factors that decide how much of a risk they could be – check where your car belongs with our car insurance group checker.

A chart showing the top 5 cheapest cars to insure

The SKODA Yeti is the cheapest car to insure on average, according to MoneySuperMarket car insurance quotes from January to March 2018.

Your insurance policy

The type of insurance you choose and your driving history will also affect your premium costs:

  • Policy type: you can normally choose between third party, third party, fire, and theft, or fully comprehensive. Fully comprehensive provides the most cover, but it can cost less due to the fact that many inexperienced drivers opt for third party – driving the price of that policy up.
  • Extras: you can add policy features to your basic car insurance deal such as windscreen damage cover or breakdown cover, but these will make your premiums more expensive.
  • Excess: the more excess you volunteer to pay, the lower your premiums tend to be.
  • Driving history: if you’ve made insurance claims in recent years or you’ve been involved in accidents, your premium may be higher. But if you’ve gone several years without claiming, you’ll get a no claims discount which could reduce your premium significantly – use our no claims discount tool to see if you can save.
  • Telematics: telematics car insurance involves installing a system that monitors your driving habits. Insurers do this so they can see how safe a driver you are, and you’ll be able to prove this to your insurer if you use a telematics box over time. You might even be able to get a discount straight away if you agree to have telematics installed.

An image comparing the average cost of car insurance by policy type

Fully comprehensive car insurance was found to be the cheapest type of car insurance policy, costing an average of £514 a year, compared to third party only insurance, which costs £1,212 – according to MoneySuperMarket data from January – July 2018.

Comparing car insurance quotes

One of the best ways to pay less for car insurance is by shopping around to find the best deal for you. You can compare quotes from different providers with MoneySuperMarket’s car insurance comparison tool – all you need to do is put in a few details about yourself, your vehicle, and your driving history.

You’ll then be able to browse through deals, seeing which policy features are included as standard and which features come as optional extras, how much the voluntary and compulsory excess amounts are, and the overall price you’d pay if you opted for a one-off yearly payment versus breaking the cost down into monthly repayments. It’s important to compare policy features as well as price to help you find the right level of car insurance cover for you.

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