How is car insurance calculated?

There are a number of factors taken into account by insurance companies when calculating your premium. These can include:

Your vehicle

The more expensive your vehicle, the more it would cost to replace or repair it in the event of a claim, so the higher your premium.
A larger engine size makes your car more powerful and therefore more likely to go faster and be involved in an accident.
The popularity of your vehicle can put you at risk of higher premiums if statistical data for your area shows that your vehicle is more desirable to thieves! Improving your security can help offset this risk.

Where you live

As mentioned above, statistical data on vehicle crime is used to calculate risk according to your postcode.

Your age

Young drivers (between 17 and 24) face the highest premiums due to the risks they pose as inexperienced and less cautious drivers. Insurers use statistical data to calculate risks according to age groups.

Your occupation

Your job can influence the cost of your premiums as statistical data used by insurers has highlighted that some occupations are at risk of a greater number of claims.

Car usage

How many miles you drive affects your premium for the simple fact that the more miles you drive, the more likely you are to be involved in an accident.

No Claims Bonus

If you haven’t claimed on your car insurance in a particular year, you will receive a no claims bonus for that period. This can be ‘built up’ usually to a maximum of five years for the highest discount on your car insurance premium.

Convictions and Points

If you have been convicted of a driving offense and/or received points on your licence this will increase your premiums. You should always disclose convictions to your broker who will advise whether they need to be declared to the insurer (depending upon when they become spent).


If you choose a higher voluntary excess on your policy, your premiums should decrease as you are taking a greater proportion of the risk for any claim. Make sure that you are in a position to be able to pay both the voluntary and compulsory excesses in the event of any claim, otherwise if may become financially uneconomical/false economy in the long term.

Type of cover

Choosing comprehensive cover over third party fire and theft will usually result in a higher premium for the majority of drivers, however, it is always worth getting both covers quoted as in some cases there may be little difference!

Drivers on your policy

If you are an experienced driver and add a young driver (e.g. son or daughter) to your policy having just passed their driving test, your premium can significantly increase, however, if they were to add you to their own policy, it could significantly decrease their premium!

Your gender

Statistically, women drivers are far less likely to cause a serious accident than male drivers. However, following the ban on gender pricing which came into effect in December 2012, insurance premiums have risen for young women.