What factors affect your Car Insurance Premium calculation?

How are car insurance premiums calculated and what factors increase or decrease the amount you pay?

Does your address, marital status, gender or your job affect your insurance premium?  Let’s have a look at what does and does not affect the calculation.

It’s worth noting that different insurance companies will use slightly different rules. And even then, they will have different schemes that are targeted towards niche markets that would otherwise be more expensive like young drivers or drivers with convictions.

But in general the following factors will form a basis of your insurance premium calculation.

Does your address affect your insurance premium?

Yes. Your address can have quite an impact on your insurance cost. While not necessarily your fault as an individual, different areas of the UK have varying risk profiles. Insurance companies will examine claim histories for each postcode area, looking at the likelihood of car crime, vandalism, theft. A rural area will be rated differently than an inner city zone, the leafy suburbs may be seen differently than lower income areas. Depending on how safe your area is deemed on balance, your premium will be adjusted very slightly behind the scenes.

Does your gender affect your insurance premium?

No. In past years female drivers were offered cheaper insurance premiums than men. Claim history showed that, on average, female drivers had fewer accidents and those accidents, in general, were less likely to involve high speed, dangerous driving.

While these facts may still stay hold true, equality legislation dictates that insurance companies cannot positively discriminate towards women as they did in the past.

So your gender should have no effect whatsoever on your insurance premium.

Does your age affect your insurance premium?

Yes. Unlike with gender, insurers are still able to apply varying rates by age. Statistically younger drivers are still the most likely to be involved in a car accident, so young driver insurance rates are typically much higher than middle aged drivers.

That benefit of age doesn’t continue forever though as older driver’s insurance premiums will start to rise again once they are past pension age. It is kind of a bell curve with the two ends of the curve seeing larger insurance premiums.

Does where you park your car affect your insurance premium?

Yes. Generally speaking if you park your car at night in a garage or on your own driveway it will be seen as less risky as parking on the street overnight.

Does your claims history affect your insurance premium?

Yes. There is no doubt that having previous claims will affect your car insurance premium. It does depend on the type of claim though. Windscreen repair or replacement claims are less likely to be counted against you.

It is important that you declare the full claims history of all drivers when applying for your insurance. If you don’t, your policy may be null and void, and your insurer will be under no obligation to pay out on claims if you have not been completely honest. Be aware that insurers have central databases where they can check if you have had claims with other insurers.

Your insurance company will look at the claims for all drivers on the policy, they will count the number of claims in the last X years and adjust your premium by a small amount.


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