How does my address affect my car insurance?

The make and model of your car isn’t the only factor that determines the price of your car insurance. Where you live can play a big role too. Find out how insurance providers calculate risk based on your postcode and how that affects how much you pay for your car insurance premiums.

The make and model of your car isn’t the only factor that determines the price of your car insurance. Where you live can play a big role too. Find out how insurance providers calculate risk based on your postcode and how that affects how much you pay for your car insurance premiums.

Alex Hasty
Insurance and finance expert
minute read
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Last Updated 10 MARCH 2022

Why does my postcode affect my car insurance?

To calculate your car insurance premium, insurance providers look at the likelihood of you making a claim. They consider all sorts of factors to assess the risk, and one of those is your postcode.

Because you do most of your driving close to home, your postcode holds key information for insurance providers on the risks you face as a driver and car owner, including:

  • The population density where you live.
  • Traffic trends in your local area.
  • Crime rates in your neighbourhood, including theft and vandalism.
  • The number of accidents recorded around your postcode and the number of claims made
  • If there are any nearby ‘high-risk’ traffic systems, such as roundabouts and cycle lanes.
  • How many uninsured drivers live nearby.
  • If there have been any fraudulent claims made in your neighbourhood.

Car insurance providers use the information on claim numbers and crime rates to rank UK postcodes according to risk. And that risk classification is one element that determines the amount you’ll pay for your car insurance. 

What postcodes are considered the highest risk?

In general, postcodes in urban and inner-city areas are considered a greater risk for insurance providers because they’re more densely populated and experience heavier traffic flows. The more cars there are on the road, the greater chance there is of an accident.

Urban areas often have higher crime rates too. According to recent government statistics, the number of vehicle-related offences reported increases in correlation with how urbanised an area is. Insurance providers consider the risk of your car being broken into or stolen when they calculate the price of your insurance premium.

What postcodes are considered the lowest risk?

Rural areas tend to be the cheapest postcodes to insure because there aren’t as many people around, there’s less traffic on the roads and normally, less crime.

What else plays a part in the calculation of my premium?

While your address plays a big role, it’s one of several other factors used to calculate your premium, including:

  • Your age – generally, the younger you are, the higher your insurance will be compared to older drivers. That’s because younger drivers aren’t as experienced, and government statistics show that drivers aged between 17 and 24 are more than five times more likely to be involved in a collision than drivers aged between 66 and 70, who have the lowest rate of collisions per miles travelled.  
  • Your job – some jobs are perceived as being riskier than others, so make sure your job title accurately represents the work you do.
  • How you use your car – you might pay more if you use your car for commuting compared to if you just drive every now and again. That’s because driving in rush hour with all those other tired and stressed-out drivers means an accident is more likely to happen.
  • Annual mileage – the more miles you drive, the higher the risk of you having an accident.
  • The make and model of the car you drive and the insurance group it falls under has a big effect on how much you’ll pay. Generally, the more expensive, powerful and desirable your car is, the higher your premium.

How can I reduce my car insurance premiums if I live in a high-risk area?

It’s not really feasible to pick up sticks and move across the country to get a cheaper deal for your car insurance, but thankfully there are other ways to lower your premiums:

  • Parking your car off the street overnight could result in slightly lower car insurance premiums if you live in a high-risk area. Insurance providers favour off-street parking because it means your car is less likely to be stolen or exposed to accidental damage from passing traffic.
  • Try to be as accurate as possible when estimating your annual mileage to make sure you’re not paying over the odds.  
  • You could choose to increase the voluntary excess you agree to pay if you make a claim. Remember, you’ll also have to pay any compulsory excess set by your provider, so make sure you set your voluntary excess at an amount you can afford. 
  • Paying annually for your car insurance is normally the cheapest option, if you can afford to do that. If you pay monthly, it’s likely you’ll be charged interest on the instalments.
  • If you’re in the market for a new car, look for one in a lower insurance group as it should help to lower your premiums.
  • You can’t magically turn everyone else on the road into a safer driver (wouldn’t that be nice) but you can do your best to drive safely and responsibly, and try to build up your no-claims discount.

How can I get a good deal on my car insurance?

One of the best ways to make sure you’re on the right deal is to shop around. We can bring you quotes from a variety of trusted insurance providers. Just answer a few questions (honestly) and we’ll take it from there. Start comparing car insurance quotes now and find the best fit for you and your car.

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