Male and female with two young children packing up red car.

How is car insurance calculated?

A host of factors are considered when calculating drivers' insurance premiums. Check out our guide below for more information and for what to be aware of when shopping for car insurance.

Calculating insurance


Statistics show young drivers are most likely to be involved in a car accident and therefore make a claim. Insurers offset some of this risk by charging higher premiums.

Driving record

If you've committed a driving offence in the past and received points on your licence, insurers will consider you to be high risk and you'll have to pay more for cover.

Claims history

Claimed on a past insurance policy? If so, you're likely to see an increase in insurance costs, even if the other driver was found to be at fault in the accident.


Technically your address can be changed, but it would be rather drastic to move house just to get cheaper car insurance. Nevertheless, the area in which you live has an impact on premiums so if your postcode has a high crime rate, you'll pay more for car insurance.

Choose your car wisely

Not bought your car yet? All makes and models fit within an insurance group. Cars in lower groups tend to cost the least to insure, so do your research before handing your money over. Read our guide on the cheapest cars to insure for some advice.

Consider the level of cover

Third party car insurance may offer the most basic level of cover required by law, but that doesn't necessarily mean it's the cheapest option. In fact, some drivers find a comprehensive policy costs them less, so always compare different levels of cover.

Make your car secure

The more secure your car is, the less likely it is to be stolen. If you don't have them already, investing in a factory approved alarm or immobiliser could see your insurance premium drop.

Raise your excess

Generally speaking, the higher your voluntary excess, the less you'll have to pay for cover. But, it's important to set an excess you could realistically afford to pay if you had to make a claim in the future.

Build up a no claims discount

For every year you don't claim on your insurance, you'll earn a discount as a reward. Over time, this can result in significant savings. You can also protect your no claims discount, provided you make no more than two claims over a three year period.

Alter your job description

Sometimes, changing your job description (lawfully) will lower your insurance.

Add another driver

Adding a responsible driver to your car insurance policy could lower your premium, sometimes significantly. But you should never add them as the main driver of the car if they aren't, as this is against the law.

Don't modify your car

If you want affordable car insurance, steer clear from alloy wheels, spoilers and body kits. The only modifications that will see your premium drop are security related ones.

Pay annually

If you can afford it, always pay for your car insurance in one lump sum. If you pay on a monthly basis, you'll pay interest on top of the cost of cover.

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