What affects the price of your car insurance?

  • Find out how you can reduce your insurance premiums
  • Is it all about age and experience, or do other factors play a part?
  • Can fitting a black box offer a solution to high premiums?

It’s not something we like to think about, but insurance is an important part of the car buying process and one of the biggest regular expenses many drivers are faced with.

But what really affects the price of your insurance premiums? Is it all about age and experience? Or are there other factors in play?

Here we take a closer look at how you can reduce your insurance premiums and what factors add up to the price you pay.

Types of cover

There are three main types of insurance cover; third party, third party fire and theft, and fully comprehensive. A lot of the time the cheapest cover is third party because you get the least from the premium. If an accident occurs and it's your fault, your insurance will cover the cost of damage to the other cars and passengers affected by the accident but not you or your car. 

Third Party Fire and Theft (TPF&T) is essentially the same with the addition of cover if your car is stolen or catches fire.

Comprehensive offers full cover for you and other parties in an accident, theft cover and in most cases accidental damage too.

Factors which affect insurance

Ultimately, the amount charged by an insurance company is a reflection of how likely a driver is to make a claim.

Age

One of the most prominent factors is your age. Statistics show that young drivers are more likely to be involved in accidents and make claims so those aged between 17 and 25 are likely to face the highest premiums. Unfortunately there is little you can do to combat this as you have no previous history to help the insurance provider determine how much of a risk as a driver you are.

There are a number of additional courses like Pass Plus which can help bring down your premiums.

Type of car

Even if you’ve 100 percent decided on the car that you want, choosing a less-powerful or smaller engine may result in a lower insurance grouping so it’s worth doing the research.

The price of your car will have a significant bearing on the premiums too. The more expensive it is, the more it’ll cost to replace or repair so your premiums will be higher to reflect this.

Also if your car is a special edition or carries unique features then it could be deemed more desirable for thieves, which could affect your premium price.

Be careful of modifications. You must by law tell your insurance company about any you make, and you usually have to pay more for each one you fit; sometimes also having to stump up for admin charges too. Failure to 'declare' any changes to your insurance company could lead to the entire policy becoming void, leaving you driving without insurance, which is a criminal offence. 

On the flip side of this, if you equip your car with modern day safety kit like blind spot monitoring systems, adaptive cruise control and collision prevention systems as factory-fit optional extras, this may help bring the premiums down. 

Where you live

Insurance companies will know where the crime hotspots are and unfortunately if you live near one your premiums will be affected. Also if you live in a city where more accidents are likely to occur this will also have an impact on the price.

Parking your car off the road - or even better in a locked garage at night - should help, as well as if you have an alarm, immobiliser or tracker professionally fitted.

Experience

Many insurance companies will also give you reduced premiums if you have stayed claim free for a number of years, more commonly known as a No Claims Discount (NCD). It's common for discounts to be applied for up to six years of claim-free driving, at which point your premium should level off, but a few firms offer further discounts for more NCD. 

You can also pay to protect your no claims and transfer them over to a new policy if you move insurance companies. 

Mileage and excess

It makes sense that the more miles you travel on the road, the more likely it is that you’ll be involved in a traffic accident. So if you set a high mileage on your insurance policy, expect your premiums to be higher as a result.

If you use your vehicle for commuting, you’re likely to pay more for cover too as you’ll be driving more frequently when the roads are busy.

It's important to get the mileage right on your insurance policy. Overstate it and you'll be paying over the odds and if you go over what your policy is based on you could end up invalidating your insurance.

Excess is the amount of money you will need to pay in the event of a claim and you’ll be asked how much excess you will be willing to pay when you take out a quote. Stating a higher excess will in most cases result in lower monthly premiums because you will be reducing any potential payouts by the insurer, but make sure you can afford it if you ever do need to claim and remember there will in most cases be a compulsory excess as well as voluntary excess to pay in the event of a claim.

Adding a second driver

Adding an experienced second driver with a good claim track record to your policy can sometimes help to reduce premiums, especially if you are young or inexperienced, however it can have the opposite effect if you’re more experienced then the driver you are looking to add. It's vital you make sure that the person driving the car most is the primary policy holder, though. It's also unlikely the second driver will be allowed to build up any NCD on the same policy.

What about 'black box' technology?

Also known as telematics technology, some insurance companies offer tracking devices to monitor your driving behavior to more fairly price your car insurance premium. It's especially useful if you’re an inexperienced driver or have made a few claims over recent years.

The system is wired into your car and uses satellite technology to record how often you drive; when and where; plus it assesses your speed, braking, acceleration and cornering.

Not every insurance company offers this though so you need to do your research and some may impose curfews as a condition to having the system fitted, meaning you'll be unable to use your car late at night.

Find out more about telematics insurance here.

Shopping around

Shopping around is an important part of finding a good deal on your insurance and comparison websites are a good place to start.  

Here at Parkers we work with a number of the UK’s leading insurance companies to help you find a good deal. Search insurance quotes with Parkers Compare here.

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