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10 things influencing your car insurance premium

We all know that applying for annual car insurance often results in a barrage of questions. The sometimes lengthy process is designed to assess the likelihood of you making a claim, and how expensive that claim might be.

While many of these factors are not requested when you apply for temporary car insurance, for the sake of comparison, here’s our top ten list of things used to calculate the cost of an annual policy.

Top 10 insurance cost factors

1. Your Age

Younger drivers between the ages of 17-25 generally face the highest premiums. A reflection of the fact that statistically, they are more likely to be involved in an accident and the scale of these claims tend to be of a higher magnitude.

In contrast, older drivers are more likely to be safer drivers with years and experience behind the wheel.

After the age of 25, insurance premiums begin to fall and stabilise, before climbing again above the age of 70. At that stage driver reaction time is considered to be a higher risk.

2. Your gender and marital status

Quotes are often higher for men compared to women, despite EU legislation introduced in 2012 designed to end price discrimination between the genders.  Insurers would argue that the difference simply reflects the fact that women make fewer claims.

Likewise, insurers often quote cheaper premiums to married people who, according to statistics, have fewer accidents than singletons.

3. Your Occupation

Insurers have a wealth of data on the rate and scale of claims for people working in different job professions. Unsurprisingly, careers that involve a high exposure to driving often command bigger-hitting premiums – for example journalists, delivery drivers, and car salesmen.

In contrast certain medical professions, police officers, paramedics and – ironically – insurance underwriters, are perceived as safer driving groups that command a favourable premium.

However, while there are often set boxes used to describe a profession, some jobs can command a cheaper premium depending on how you label your job. A journalist could also be a writer and a mechanic could be a vehicle technician.

If your role can be described in different ways, it could be worth shopping around for quotes using alternative job titles.

4. Your car Insurance Group

One very simple way to limit your premium is to purchase a vehicle on a low insurance group. Every car in the market today is categorised into one of 50 groups, where Group 1 is the cheapest to insure and 50, the most expensive.

Insurance groups are rated by a panel that includes the Association of British Insurers (ABI) and Lloyds Market Association, working alongside Thatcham Research, a not for profit group who specialise in testing vehicle safety.

Cars in the higher groupings are typically more expensive with bigger engines. As such, they cost more to replace or repair if stolen or involved in an accident

The Car Insurance Grouping also considers a vehicle’s potential impact on third parties involved in a collision. The damage caused to other vehicles and pedestrians are important considerations when calculating a potential pay-out to third parties.

5. Your driving history

If you have any points on your license or you’ve made any claims in the past, insurers will see you as an increased risk, more likely to make a claim in the future.

On the flip-side: if you haven’t made a claim for a year or more, you are likely to have some kind of no-claims bonus (NCB) qualifying you for a discount on a renewal or future policy.

You can usually build up to 5-years NCB, with many insurers allowing you to protect your NCB discount by paying a little extra on your premium. NCB protection effectively enables you to make a claim without it ­affecting your discount.

6. Where you live

Your postcode can have a significant impact on the cost of your premium. High crime neighbourhoods or built-up areas where the risk of accidents and vehicle theft is greater, will inevitably result in you paying more for your premium.

7. Where you keep your vehicle

Your premium is likely to be higher if you park your car on the street, where it is more vulnerable to damage and theft.

You can reduce your premium costs by parking on a driveway or, better still, securing your vehicle in a locked garage or monitored carpark.

Your premium can also be lower if your car has alarms and immobilisers likely to deter thieves.

8. How much you drive

Insurers will often bump up your premium if you have a high annual mileage or use your car for business and commuting purposes. In simple terms, you’re more likely to have an accident if you do lots of driving when roads are busier and more dangerous.

Premiums can be reduced by limiting your annual mileage to an agreed maximum level and restricting your car usage to non-business and commuting purposes.

9. The cover you buy

Insurers will usually offer three levels of coverage:


Third Party

Third Party Fire and Theft

While you would think that third party coverage is likely to be cheapest, this may not always be the case, so make sure you shop around and ask for quotes on all options before you buy.

10. Your Excess

Your insurance excess (sometimes referred to as a deductible) is the set amount of money that you agree to contribute towards any claim. The insurer will only settle the remainder of the claim once you’ve paid your excess.

You can often reduce the cost of your premium If you agree to a larger excess; in effect agreeing to shoulder a larger proportion of the costs in any claim.

A final thought

Annual insurance can be a significant part of the cost for owning and running a vehicle. Before you buy, it is worth reflecting on how often and under what circumstances you’ll be driving.

In some cases it may be cheaper to add yourself as a named driver on someone else’s policy. You should only do this if you are a secondary driver and are NOT the principle or main driver of the car. If you miss-represent yourself as the secondary driver as a way to reduce the cost of your insurance, it can result in the cancellation of your policy and the refusal by the insurer to pay out damages in the event of an accident.

Higher risk drivers may also be able to reduce their costs by adding an experienced driver with several years no claims onto their policy. When all drivers are considered in totality, the additional driver effectively dilutes the overall risk exposure.

The temporary insurance alternative

If you are an infrequent driver it can also be cheaper to purchase temporary coverage to drive a vehicle already insured in someone else’s name. For example, young drivers might find it more cost effective to insure themselves on a parent’s or friend’s car on an hourly or daily basis.

Taking out temporary insurance is an incredibly quick process. Using our quote and buy form usually takes less than 2-minutes. You also won’t need to provide the long list of details above, such as your expected mileage.

That means, for example, you could quickly switch drivers on a long roadtrip, by insuring a passenger to take over driving to share the load. You could also lend your car to a friend, perhaps insuring them for a few days at a time.

For further uses and benefits if temporary insurance read: driving someone else’s car.

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