Car insurance

How car insurance premiums are calculated

Insurers consider lots of things when calculating the price of your policy.

Some of the big ones are:

• Where you live and your postcode will affect your price. Insurance is based on risk, so if you live in a built-up area where there might be more vehicle crime or higher accident rates you can expect to pay more than someone living in a rural area where the risks are lower.
• Your age is significant to insurers. Generally, the younger you are, the less driving experience you’ll have. In insurers eyes this means you’re more likely to have an accident and make a claim.
• The car you drive will have a large bearing on how much you pay. Things like the value, availability of parts and power of the car are taken into consideration because cars with modifications, high powered sports cars and expensive cars typically cost your insurance provider more if you need to make a claim.
• What you do for a living is important as it gives an indication to insurers of how much time you spend on the road.
• Your driving history including previous claims or accidents will help give insurance companies an idea of how you drive. If you’ve made a claim in the past 5 years, it can affect the cost of your insurance. Driving convictions will also contribute to the amount you pay.