How is car insurance calculated?
Car insurance is tailored to you, your car and your location. Risk is the key factor for providers when it comes to working out what you pay. So, if you are over 50 then the assumption is that you’re a lower risk driver with all that experience you’ve had behind the wheel. Plus, chances are you’ve accrued some no claims discount.
Insurance providers also consider how secure your car is – so where you keep it, where you live and of course – what type of car it is in the first place. All of these variables go towards working out the cost of your premium.
And once your data’s been crunched, IPT or ‘insurance premium tax’ is added on. This is a bit like VAT on other products and it’s automatically included in the final price you’re quoted. IPT has risen quite spectacularly over the last few years – when it was first introduced in 1994 is was just 2.5%, but as of June 2017, it’ll be 12%. So, the rising cost of IPT is a contributing factor in the increasing cost of your car insurance.