How Premiums are Calculated

When insurance companies calculate your motor insurance premium, they will take into account the type of car, who will drive it, how it will be used, and the type of cover required. The higher the risk you pose, the more you'll pay because there's a greater the chance that the insurance company will have to pay out on a claim.

1. Drivers

Your insurers will want to know about anyone who is likely to drive - particularly their age, experience, driving record and occupation. Accidents cost insurers money, and so the less likely you are to have an accident the lower your premium.

Age

Statistically, younger drivers have more accidents. Consequently, the younger you are, the higher your premium. In fact, some companies will refuse to insure drivers under a certain age. Conversely, drivers over 50 often benefit from discounted premiums.

Driving Record

If you have any driving convictions, then your premium will be seriously affected. It has been shown that there is a direct link between the number of speeding convictions a person may have and their likelihood of making an insurance claim. As a result, these policyholders will face higher premiums until their driving record improves.

Drink driving convictions are taken very seriously, and convicted drivers will face extreme difficulty in obtaining insurance. They will certainly have to pay far higher premiums than before their conviction. Additionally, insurers may only offer a basic level of cover, such as third party fire and theft. These cover restrictions and higher premiums will affect these drivers for a number of years.

Occupation

Your choice of career could make a difference to the premium you pay. People with high risk occupations such as journalists, politicians and restaurateurs can expect to pay higher premiums, whilst jobs such as office work and teaching are considered lower risk.

Gender

Women are statistically safer drivers than men. As a result, some companies offer lower premiums to female drivers.

Location

Your postcode is an important motor insurance factor, and is one of the easiest ways an insurance provider has to make a judgment about your premium. Car crime and accident rates are higher in city centres than in rural locations, and so urban dwellers will usually pay more for their insurance than those who live in the country.