Why has my car insurance gone up?

Last updated May 25 2020

Car insurance prices are based on several risk and economic factors. Due to this, car insurance premiums can fluctuate. Where you may have control over some possible risk factors, the economic factors are beyond your control. It tends to be more expensive when you are a younger or older driver and once you are over 25 insurance prices are likely to plateau or decrease.

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What causes my insurance premium to increase?

Risk Factors can cause your insurance price to increase, so if your insurer believes you are high risk it is possible they will increase your premium.

Insurance providers base this risk on different areas, such as if you have points on your license or have had any accidents in the last 5 years and submitted a claim to your insurer. These highlight an increase in risk to your insurer, which may result in them increasing the price of your insurance. Other risk factors include:

  • Criminal convictions
  • Certain car modifications
  • Your occupation

There are certain economic factors that can also cause your insurance price to go up that are out of your control. These include insurance premium tax; this is a standard rate of 12% but this doubled between 2015 and 2017 from 6% to 12%. Unfortunately, the number of uninsured drivers on the road can affect insurance prices, for example, when in an accident with an uninsured driver you are able to submit a claim to the Motor Insurance Bureau, which affects car insurance prices as they retrieve the funds paid out by increasing premiums for law-abiding drivers. Another economic factor is the “Ogden Rate”, which is what is used to calculate personal injury claims. As of March 2017, the discount given to insurers was reduced to 0.75%, as a result claimants may receive bigger pay-outs at the cost of their insurance company.

Other factors that affect insurance prices

There are many factors that contribute to the price of your insurance policy that are beyond your control, including:

  • Your age – young drivers and drivers who are over 70 may experience higher car insurance prices
  • Your postcode
  • Your car insurance group – the higher the group your car is in the more expensive your premium might be
  • No Claims Discount (NCD) – if you have no NCD this will increase your risk to insurance providers as they don’t know your history.

How to get the best price on your car insurance

There are ways to ensure you are getting the best price for your car insurance. When renewing your policy you can consider:

  • Black box insurance – this tracks you whilst you’re driving and can reduce the risk to your insurer. You can find more here
  • Voluntary Excess – setting a higher voluntary excess can reduce the overall cost of your policy
  • Shop around – There is no shortage of insurance companies and their prices may differ considerably, so it is worth taking the time to compare quotes from each provider rather than simply accepting your renewal quote
  • Pay upfront – Paying in full instead of choosing monthly instalments will mean that you don’t pay interest on your insurance costs, therefore reducing the amount you pay overall.