5 Factors That Affect Car Insurance Premiums

Understanding how your car insurance costs are calculated can be tricky. A variety of other factors come into play, all of which could potentially increase or decrease your premium.

Getting to grips with what influences your rates can help you take control and make informed decisions about your cover.

Age and experience

Your age and the number of years you’ve been on the road play a big role in determining your premium. Younger drivers, particularly those under 25, usually face larger fees due to their lack of experience and higher risk of accidents. 

As you gain experience, your prices tend to drop, but the savings can be quite substantial if you’ve been driving safely for years.

Vehicle type

The type of car you drive directly affects the price of coverage. Cars are categorised into insurance groups, with higher groups typically indicating more expensive cover. This is because models in these groups are often expensive to repair or replace.

Generally, smaller, less powerful vehicles will cost less to insure, while high-performance vehicles can lead to costlier premiums due to the increased likelihood of accidents or theft.

Where you live

The area you live in can make a noticeable difference in how much you pay. If your home is in a location with higher crime rates or traffic levels, you could cough up more for your cover. 

On the other hand, if you’re located in a rural area with fewer vehicles on the road, your premium may be lower. Insurers also take into account the proximity of your home to essential services like emergency services or repair shops.

Driving habits

Your behaviour behind the wheel directly affects how risky you are for insurers. If you drive often, particularly at night or in bad weather, you may be deemed a greater risk, increasing your expenses. 

However, the amount you pay might decrease if you can demonstrate safe habits. Taking out telematics insurance can help improve your premium by tracking your driving behaviour, and offering discounts for safe habits.

Claims history

Your claims history can also impact the cost of your coverage. If you have a history of claiming, providers may consider you a greater risk and increase your rates accordingly. 

That being said, maintaining a clean record over the years can help you secure discounts. For example, having a no-claims bonus can substantially lower your costs as it demonstrates to insurers that you are less likely to make a claim.

Ultimately, the amount you pay for car insurance depends on a variety of factors. While some, like age or vehicle type, are harder to change, you can influence others. By taking some simple, proactive steps, you could reduce your premium significantly.