How is car insurance calculated?
Car insurance is tailored to you, your car and where you live. Risk is the key factor for insurance providers when it comes to working out how much your premium will cost:
- Your age - car insurance for young drivers is by far, the most expensive. That’s because drivers under the age of 25 are more likely to have an accident, and therefore make a claim or have a claim made against them. Statistics show that one in four (23%) of 18-24-year-olds crash within the first two years of passing their driving test. On the other hand, if you’re over 50, the assumption is that you have more driving experience, so your premiums are likely to be lower if your driving history matches
- Your car - the type of car you drive is also a deciding factor when calculating the cost of car insurance. Generally, more expensive and powerful cars will cost more to insure. And any modifications you make to your car such as alloy wheels or a new stereo system, can bump up the cost of your premium too
- Where you live - the risks that insurance providers look at include the likelihood of your car being stolen or damaged, so they’ll take into account where you live and where you keep your car overnight. They’ll look at the local crime rate, whether the area is urban or rural, and the road accident statistics for that area. If possible, keep your car parked overnight on a private driveway. Parking your car off the road reduces the risk of it being stolen or vandalised, and may help to cut the cost of your premium
- Insurance Premium Tax - there’s also one other element that gets added onto the cost of your insurance and that’s insurance premium tax (IPT). It’s currently charged at 12%