Car insurance premiums can be a significant financial burden, and reports show that many motorists are paying more now than they were in previous years. According to the Association of British Insurers (ABI), motor insurance premiums rose by 29% during the third quarter of 2023, reaching an average price of £561. To help you manage these costs, private hire insurance specialists at Zego have shared six factors that insurers consider when calculating your premium and provided some tips to help lower your quote.
Location
When making a claim, insurance providers consider local statistics for your area, such as driving behavior, crime rate, and the average number of legitimate and fraudulent claims made by other road users. For example, living near a road known for accidents could result in more claims being made in your area. Compare the Market found that insurance premiums in Greater London can cost an average of £200 more compared to other areas in the UK, such as the West Midlands or the Northwest.
Where you park your vehicle is also taken into consideration, with vehicles parked in unprotected areas being more vulnerable to damage. Parking your car in a private car park while working and in your own driveway at home may help reduce overall costs.
Occupation and employment status
Your occupation is used by insurers to calculate how likely you are to make a claim. According to MoneySuperMarket, hospital consultants and car salespersons had the highest car insurance quotes on average. Making small legal tweaks to how you list your occupation can result in significant savings, but it’s important to ensure that the information remains accurate and representative of your actual job.
Age
Younger drivers are typically seen as inexperienced on the roads and more likely to get into accidents, resulting in increased premiums. On the other hand, older drivers can receive higher insurance premiums because they are statistically prone to accidents. Installing a black box can help lower these costs by demonstrating safe driving behavior, regardless of age.
Vehicle profile
All vehicles are categorized into insurance groups based on various factors, including the vehicle’s price, repair costs, model, and safety features. The vehicle’s age and modifications can also impact the insurance premium. Opting for small cars with less powerful engines and ensuring the vehicle has alarms and immobilizers installed can result in cheaper insurance options.
Mileage and driving history
The more miles you drive, the higher your premium is likely to be. It’s important to accurately estimate your annual mileage to prevent overpaying for insurance. Additionally, insurance providers take into consideration any suspensions, convictions, or penalty points on your license when calculating your premium.
Claims history
If you have previously made a claim, this can significantly increase the cost of your insurance premium. However, providers will consider up to five years of no-claims bonus when discounting your premium, providing a discount based on the number of consecutive years you have avoided making any claims for your vehicle.