How your premium is calculated

The main factors influencing the cost of your insurance policy are:

  • Age of the driver
  • Sex of the driver
  • Performance of your vehicle
  • Number of years you have been driving
  • Use of the car on a daily basis
  • Postcode in which the car will usually be kept

Hot Topics

What if I am a young driver?
In the UK, car insurance quotes are dependant upon several factors, these include age, gender and location. One of the overriding considerations is the age of the potential policy holder, the younger the driver the more expensive the policy in most circumstances.
What types of Motor Insurance Policy are available?
Since 1930 it has been a legal requirement for all drivers of motor vehicles to be covered by insurance for a minimum of third party claims, that means you have to be insured against accidents that are caused by you and have damaged a ‘third party’s’ vehicle.
What is Third party fire and theft Motor insurance?
Whilst technically your legal requirements for motor insurance are covered by a third party only policy they only protect the people with whom you share the roads, not yourself. The law requires that people who are involved in an accident that is not caused by themselves, be compensated. So, with third party insurance you may be protected against other people's claims against you, but not if you are responsible for the accident.
As a result of the accident, my car has been damaged - can I go ahead and get it repaired?
If you have taken out comprehensive car insurance cover and wish to claim under the policy, a specific claims procedure will be given to you when you contact the Claims Line to notify them of the accident. You should not repair your vehicle without the approval of your insurer.
Excess
What is an excess? An excess is the amount you have to pay if you make a claim on a car insurance policy.
Looking at all of these factors as a whole the insurer will calculate your annual premium.
Insurers take a view on the market as a whole, they statistically analyse the risk of claims in different areas of the market and work back to offer each their premiums. This always applies, whether or not you are a good driver, you will always be offered the premiums that your characteristics allow you NOT your skills.

The group most likely to pay high premiums are young, adult males with a high performance vehicle with relatively little driving experience. In these cases premiums may be as large as £5,000 to £10,000 per annum.

Another example, female drivers in their early fifties with a small low performance vehicle who have been driving the majority of their life will pay a significantly lower premium than the young males mentioned above.

Type of car

Cars are categorised into 1 of 20 insurance groups. The higher group, the higher the premium. These groups are defined by a number of factors, such as:

  • The cost to repair certain body parts
  • The ease of replacement of certain body parts
  • The ease to find certain replacement body parts
  • The acceleration of the vehicle
  • The value of the car when new
  • The car's resistance to theft

By collating this information, a sliding scale is calculated for the car which will ultimately correspond to the premium necessary to cover the vehicle.