What affects the price of car insurance?

Car owners pay into a central pot and it’s these contributions that cover the cost of those who are unfortunate enough to have to make a claim.

So when we set the price of your car insurance, we analyse hundreds of factors ranging from how many claims are being made, your own details and experience and what’s happening throughout the constantly changing world that we live in. We know it’s important for you to shop around to get the best possible price and that’s why we continuously examine the way we calculate the cost of car insurance. 

We’ve listed a few examples to help bring to life how the price is affected.

How your details affect the price of your car insurance

Location

We take into account everything from the number of claims, volume of traffic, theft rate and vandalism within the area that you live. Fewer incidents tend to result in fewer claims, so it could reduce the cost of insuring vehicles in those areas.

The car

The make, model, age, fuel type, value, transmission and engine size of the car all influence the price of insurance. Furthermore, the longer you’ve owned the car, the more familiar you are with driving it, which may result in a lower price.

Driving patterns

All things being equal, the fewer miles driven, the less likely you are to claim, as you’ll be on the road less. Plus the nature of the journey can also affect the price. For example, if you don’t drive during busy times then it may cost less than if you commute.

No claims discount

As a reward for showing us that you’re a safer driver, the more years of claim free driving, the larger the discount.

Previous claims

The price we quote may be affected by any accidents and/or claims you’ve had during the last five years.

Driving convictions

Our data tells us that those with a driving conviction are more likely to claim, which can affect the price. This is why we take into account driving convictions when calculating the cost of insurance.

Drivers of the car

We look at all kinds of details for all drivers, such as age and type of licence when setting the price. Statistics reveal that older drivers are less likely to claim, which means the risk is lower and so the price is likely to be less.

How the world around us affects insurance prices:

Parts and repair costs

Repairs and car parts generally become more costly each year, and this is taken into account when setting insurance prices.

Insurance Premium Tax (IPT)

IPT has increased consistently over the last five years. In June 2017 this went up a further 2%, from 10% to 12%. This results in car insurance prices changing.

Types of claims

The price we give customers include an estimation on how much we’re likely to pay in claims in the future and if the variety of claims change, prices will change too. For example, over the last decade, there’s been an increase in personal injury claims, resulting in higher insurance costs.

Change in number of claims in the market

Thousands of claims happen every month and if the volume increases (for example widespread flooding) this pushes prices up.

Bad weather

Weather can impact the number and severity of claims. Constant rain, icier roads and even prolonged hot or cold temperatures can influence the frequency of incidents as not everyone adjusts their driving behaviour for different conditions.

Fraud

Don’t do it, it’s illegal. Fraudulent activity adds approximately £50 to every car insurance premium and if false or inaccurate details are provided it can result in the policy being invalid and claims not being paid. Rest assured, we’re always looking at new ways to combat this in order to keep our prices down.

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