How is car insurance calculated?

The cost of car insurance can vary drastically depending on a number of factors, but in general, insurers calculate how much they charge dependant on risk; the more they think you are likely to make a claim, the more expensive your premium will be. While more experienced drivers are lucky enough to secure affordable premiums, ‘higher risk’ drivers are likely to pay significantly larger amounts. Premiums in the UK have increased dramatically by 11% this year, taking the cost of car insurance to a record high. So, the question on everyone’s lips is, how is car insurance calculated?


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What influences car insurance premiums?


There are many considerations that influence the cost of your car insurance policy, some personal and some that can be easily altered. One factor that can no longer be used to calculate insurance quotes is gender. However, statistically men hold a higher risk as they tend to opt for faster cars and are more likely to put in a claim, therefore, can still be charged higher premiums than women. But, whatever the reason there are things you can do to help secure cheaper insurance quotes.

  • Age and experience

    How old you are is a key factor when it comes to calculating car insurance. Insurers consider younger drivers to hold the most risk, which isn’t surprising since statistically, 25% of all fatal crashes have involved drivers under the age of 25. Therefore, young and inexperienced drivers are often quoted much more during their first few years on the road. Older drivers are also considered high-risk, and can see their insurance rise compared to others.

    What you can do: if you’re new to driving or you are under 25, it can often go in your favour to add another named driver to your policy, a parent, for example. Having an experienced driver with a good driving record and no claims bonus can help to bring your premium down.

  • Where you live

    Location can also cause your premium to rise. If you live in an area with a high crime rate then insurers will believe you to pose a higher risk than those who live in a lower-risk area.

    What you can do: there are a few things you can do to lower your ‘risk factor’; if it’s possible to park in the driveway rather than the road, this will decrease the chances of break-ins and accidental damage. You can also add security features, such as an alarm or an immobiliser, which will put insurer’s minds at ease when it comes to the safety of your car.

  • Occupation

    It may sound surprising to some that your job role can affect the cost of insurance quotes. Some occupations require you to be on the road more, or carry equipment which can have an effect on your premium.

    What you can do: have a play around with your job title. There is often more than one way to define your occupation and when it comes to insurance premiums, certain job titles have a bigger price tag than others. For example, an artist may receive a different quote than an illustrator, but many would consider this an identical, or at least very similar occupation. Be honest with details, but consider how you could ‘define’ your occupation and input a variety to see which results in a cheaper premium.

  • Vehicle choice

    The car itself will play a part in the insurance calculation. For example, if you opt for a sporty car or a 4x4, your premium is more likely to be expensive. Why? Well, you are statistically more likely to drive dangerously according to insurers, whether this means faster, or off-road. However, if you pick a more ‘standard’ vehicle, like a Ford Fiesta, your premium could drop.

    What you can do: it may seem more appealing to get a flash car, but if your insurance is through the roof, it might be ideal to go for a smaller, cheaper car until you have built up a few year’s no claims bonus. Also, restrain from modifying your car, whether your adjustments are internal or external, any additions to your car, as good as they may look, can increase your premiums. If you decide you need to sell your car for a cheaper one, find out how much your car is worth with webuyanycar.

  • Type of policy

    There are multiple policies that you can choose from dependant on which one will suit you best. You don’t always have to opt for the most expensive with the biggest cover. If you’re not sure on what different policies there are, here are the most common:

    • Third party: covers claims from other drives to cover the expenses of their vehicle damage and injuries.
    • Third party, fire and theft: covers the above, including accidental fire damage and theft of your own vehicle.
    • Comprehensive: covers all the above, including damage to your own vehicle and injuries to yourself.

    What you can do: shop around! Don’t just settle for the most obvious or the first one you find. There are many insurers out there offering different policies. Have a look at them all, read what extras they provide, and figure out which policy is best for you and your needs.

  • Driving history

    If you are an experienced driver, your driving history can impact your car insurance. If you’ve had to claim in the past then, unfortunately, your premium will take a hit, but if you have a good driving history then you will likely be rewarded by having your premium drop year on year.

    What you can do: if you have a good driving history then it would be advisable to protect your no claims. This comes at a small fee, but if there comes a day where you have to claim, then all those years of no claims will remain intact and won’t have too much effect on next year’s premium. If your driving history is less than ideal, try increasing your voluntary excess to lower the cost of your car insurance. This means the insurer won’t have to pay-out as much if you need to claim, and will likely offer cheaper premiums as a result.


If you’re finding your car insurance is costing too much, take a look at the above factors that can influence your premium and what you can do about it. If you follow these tips you’re on the right road to a cheaper car insurance policy. If you decide you need to sell your car for a cheaper one, find out how much your car is worth with the webuyanycar car valuation calculator.


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