How to calculate your car insurance?

Knowing how your premiums are calculated can help you find the cheapest car insurance quotes. With the facts, here’s comparison site mustard.co.uk.

How do insurers calculate car insurance?

Premiums are determined by a number of factors. It’s why you’re often asked so many questions when you look for policies.

Insurers use the information you provide to work out what the chances of you making a claim are. As a general rule, the higher the chances, the more you can expect to pay. Some of the most common factors insurers will consider, include:

Age and address

Young drivers tend to pay significantly more for their car insurance compared to any other age group. This is because under 25s are statistically more likely to be involved in an accident.

Similarly, if you live in an area with a higher than average crime rate, this is likely to be reflected in your premium, as there’s a greater risk of damage, vandalism or theft.

Job title

For some insurers, certain jobs are linked to risky behaviours and this can have a negative affect on your premium. For instance, professional sportspeople can expect to pay more for their insurance than teachers or nurses.

The policy you choose

You can choose from one of three levels of cover, third party only, third party, fire and theft, and comprehensive. On top of this, you’ll usually be able to add extra features to increase the number of events you’re covered for, for instance, breakdown cover or legal expenses. Adding features will cost you extra, so the more you add, the more you’ll pay.

Your car’s class of use

Class of use is the term insurers use to describe the activities you use your car for. For example, social, domestic, pleasure (SDP) or social, domestic, pleasure, plus commuting (SDP+C).

As a general guide, using your car to commute or for business means you’ll pay more compared to someone who uses their car less regularly for social, domestic or pleasure purposes only.

Annual mileage

If you drive a lot, you have a greater chance of being involved in an accident compared to someone who only drives a few times a week. As a result, drivers with high annual mileages can expect to pay higher premiums.

Car insurance group

Cars in the UK belong to one of 50 insurance groups, which are based on factors like the car’s price, safety and security features and cost of repairs. Broadly speaking, the lower the group, the cheaper the car is to insure as it costs less to repair or replace.

What impact does my driving history have on premiums?

Insurers will also usually ask you about your driving history and in particular whether you have any driving convictions. If you do, it can increase your premiums considerably. This is because as far as many insurers are concerned, it means there’s a higher chance of you making another claim, compared to a driver who’s never claimed before.

Another important question insurers will ask you is whether you’ve made any claims in the last five years. Again, this is because if you have, you’re more likely to make another.

How can I cut car insurance costs?

Some factors that affect how much you pay can’t be changed, but there are ways to keep the cost of car insurance as low as possible, for instance: 

• Pay for cover annually – paying for your policy upfront means you’ll avoid interest fees which can save you money in the long term.
• Boost security – this is all about lowering the risk of your car being damaged or stolen so if you don’t have a garage or private driveway, consider an immobiliser or car alarm.
• Lower your mileage – if this isn’t practical, try to be accurate about the number of miles you cover, because overestimating your mileage could mean you pay more than you need.
• Increase your voluntary excess – remember that you’ll need to pay the excess if you want a claim to go ahead, so whatever amount you choose to agree, it should still be affordable.  
• Add a named driver – adding another driver, especially a more experienced one, can help lower your premium. 
• Play with your job title – if there are variations in job titles, for example, nurse versus community nurse or hairdresser versus stylist, see what happens to the price with each option. These tweaks can have a surprising effect on what you pay but try not to get too carried away, the description should still accurately describe what you do. 
• Compare car insurance – comparing quotes is one of the most effective ways to ensure you get the policy you want within your budget. At sites like mustard.co.uk, it’s also quick and easy, simply start a quote online or speak to an expert on 0330 022 8825.