How is car insurance calculated?
Car insurance is tailored to you, your car and where you live. Risk is the key factor for insurance providers when it comes to working out what you pay.
Car insurance for young drivers is the most expensive by far. This is because, statistically, that age group has the most accidents –almost a quarter of all 18 to 24 years olds have a crash inside the first two years of driving – and are therefore most likely to make a claim or have a claim made against them. On the other hand, if you’re over 50, the assumption is that you’re a lower risk driver because of all your experience on the road, so your premiums are likely to be lower.
The type of car you drive has a huge impact on your premiums. As a general rule, more powerful and more expensive cars cost more to insure. And any modifications you make to your car, such as adding alloy wheels or a spoiler, can bump up the cost of your premium too.
Where you live
The risks that insurance providers look at include the likelihood of your car being damaged or stolen. As your home and work are where your car is likely to be parked for the majority of the time, this has to be taken into account. Insurance providers look at the local crime rate and the roads you park on – whether they’re urban or rural – and how many accidents have happened in the area.
If possible, you should keep your car on a private driveway overnight. Parking your car off the road reduces the risk of it being stolen or vandalised, and may cut the cost of your premium.
There’s also one other element that gets added onto the cost of your insurance and that’s insurance premium tax (IPT). It’s currently charged at 10%, but will rise to 12% from June 2017.