Every driver must have insurance to legally drive, but do they always know what goes into
calculating the final cost? Most have a vague idea, but can’t give a definitive answer. Insurers factor
in a number of variables – from driving habits and location to where the insurance is bought from.
The AA have created an animated video about it that you can see by clicking here, and we go into further
Obviously, the type of your car you drive is going to be a major factor in an insurers pricing. The age
and value of the car are important, as well as the insurance group that it’s in. Insurance groups are
worked out by a cars price when new, their performance, repair costs and the cost of replacement
parts; meaning higher performance car models are usually in higher insurance groups as they will
cost insurers the most in claims. Security features, such as locks and alarms, also factor into an
Car modifications like tinted windows or custom exhausts can also increase insurance cost whereas
additional safety features like a collision warning system could lower it. Although still in
development, autonomous or driverless cars could also attract a much lower premium due to being
The other big factor that goes into insurance calculations is how you drive. Your expected annual
mileage will indicate to an insurer how much deterioration may occur to your car. Having penalty
points, suspensions or convictions on your license, as well as previous insurance claims, will also be
important in how your premium is assessed.
The area you live in will also be considered as it may have higher crime and crash rates meaning
more claims. Although it doesn’t reflect your own driving, insurers have to account for this as the
risk of theft or accident increases.
Besides the above considerations, there are additional factors that go into insurance calculations.
One, is your no claims discount – the number of years that have gone by without you making a claim
on your car insurance. The more years, the better the discount.
The other is your level of voluntary excess – the amount you pay towards an insurance claim. There is
voluntary and compulsory excess; you set the voluntary amount of excess whereas your insurer sets
the compulsory amount. By choosing a lower voluntary excess, it can raise your premium.
Other policy add-ons to your insurance such as a replacement car, legal assistance cover, windscreen
cover will also affect your insurance cost.
Cheaper car insurance
There are a few ways that you can get cheaper car insurance. If you buy from a third-party website,
such as a comparison site, you may only see basic packages rather than a customisable package that
you may need or prefer. In this case, it might buy straight from an insurer as you may get a greater
level of cover or additional benefits such as a courtesy car.
Technology such as a car black box that tracks your driving can also lower premiums with many
insurers. For new drivers, doing a Pass Plus driving course to improve their driving ability can also
lower their insurance premium with some insurers. It’s wise to check first, to see if they do.