What affects car insurance?

While everyone needs to have car insurance if they want to drive, not everyone is going to be eligible for the same deals and level of cover.

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Each insurer calculates your premium in their own way, based on their experience and their appetite to risk, but there are a number of things that will generally apply.

In basic terms, car insurance providers base their prices on the likelihood they’ll have to pay out for your vehicle over the course of your policy. So, if you’re perceived to be higher risk and more likely to claim, due to things like points on your licence for speeding for example, the higher your premiums are likely to be.

In this guide we look at a few things that are likely to impact the cost of your cover.

No claim bonus and your policy history

If you’ve claimed on your car insurance during the course of your last policy, chances are this is going to affect your premiums.

Recent claims are often seen by insurers as a suggestion that you might not be being as careful as you should be when looking after your vehicle. As a result, they will consider it more likely that they will have to pay out during the course of your policy and so will increase the price to accommodate for this.

However, if you have a policy and haven’t claimed on it, then you will be considered a safer driver by your insurer. Chances are when you renew, you’ll be offered a ‘no claim’ discount by your insurer to reward your careful behaviour.

This is a great thing to take advantage of, but make sure you check other deals on the market before signing on the dotted line.

Your experience as a driver

Like most things in life, driving improves with practice. Great news if you’ve been driving years, less so if you’re a new or young driver.

If you’ve just passed your test, or aren’t used to driving then chances are that you’ll be charged more than a driver who has been on the road for twenty years.

On the other hand, if you don’t drive regularly, or don’t make long journeys in the car, your premiums are likely to drop as the less time your car spends on the road, the less chance there is of it being involved in an accident.

Vehicle type

If you choose flashier wheels the pricier your premium is likely to be. More expensive models will cost your insurance provider more to replace or repair, so they’ll factor this in when calculating your insurance. Cars that are less expensive to fix or replace will mean a cheaper deal.

To get an idea of what models will mean a higher premium it’s worth checking your vehicle’s car insurance group. Also, bear in mind any unnecessary car modifications, like spoilers, alloy wheels or expensive car stereo systems, can also affect insurance costs and you must declare these to your insurer.

Where you live and drive

There are a number of statistics from your area that insurance providers look at to work out how likely you are to make a claim. These include general driving behaviour, the crime rate, how busy your area is and the average number of claims (legit and fraudulent).

Generally, as a rule of thumb, if your area has a low crime rate and/or a less traffic on the roads, your insurance is more likely to be cheaper. For example, if you live in a quiet suburb you will pay less than if you live in a city centre. Please bear in mind, entering incorrect information such as address details could invalidate your policy, which means you may not be covered in the event of a claim.

The excess on your policy

Excess refers to the minimum amount you pay towards the repair/replacement costs of any claim you make.

In some cases, policies with higher excess have lower insurance premiums. This is because not only does it mean policy holders are less likely to claim for small damages such as scratches etc, but when the insurance company does have to pay out, they pay out a smaller amount towards the claim.

The level of cover

Your cover level will have an impact on your insurance premiums.

Each policy, particularly if you have comprehensive cover, will offer different things that they will pay out for. The more bells and whistles that are included, the higher your premiums are likely to be.

So if you have comprehensive cover, but the price makes your eyes water, ask yourself do you need to have an insurance policy that covers the cost of new keys? All these extras push the price up, so be sure to check you’re only paying for the cover you really need.