How your premium is calculated

The main factors influencing the cost of your insurance policy are:

Age of the driver
Sex of the driver
Performance of your vehicle
Number of years you have been driving
Use of the car on a daily basis
Postcode in which the car will usually be kept

Hot Topics

What if I am a mature driver?: Drivers over the age of 50 tend to have less than average number of accidents and as such deserve a discount on their car insurance premiums. However not all insurance companies recognise this claiming behaviour and offer the over 50’s market a discounted premium.
What are the laws regarding Motor insurance in the United Kingdom?: Motor insurance originated in 1930, when the government introduced a law that required every person who used a vehicle on the road to have some kind of motor insurance policy. This had to be third party personal injury cover at the very least.
What is Third party fire and theft Motor insurance?: Whilst technically your legal requirements for motor insurance are covered by a third party only policy they only protect the people with whom you share the roads, not yourself. The law requires that people who are involved in an accident that is not caused by themselves, be compensated. So, with third party insurance you may be protected against other people's claims against you, but not if you are responsible for the accident.
What are the road tax rates by specific type of vehicle?: The collection and administration of road tax is done by the DVLA (Driver and Vehicle Licensing Agency). The DVLA is responsible for all regions of the UK. Their aim is to facilitate safe and responsible driving throughout the UK. In addition to road tax they are also responsible for keeping a registry of all vehicles and qualified drivers.
I am at the scene of an accident - what do I do?: Take note of the registration number of all vehicles involved within the accident.

Looking at all of these factors as a whole the insurer will calculate your annual premium.
Insurers take a view on the market as a whole, they statistically analyse the risk of claims in different areas of the market and work back to offer each their premiums. This always applies, whether or not you are a good driver, you will always be offered the premiums that your characteristics allow you NOT your skills.

The group most likely to pay high premiums are young, adult males with a high performance vehicle with relatively little driving experience. In these cases premiums may be as large as £5,000 to £10,000 per annum.

Another example, female drivers in their early fifties with a small low performance vehicle who have been driving the majority of their life will pay a significantly lower premium than the young males mentioned above.

Type of car

Cars are categorised into 1 of 20 insurance groups. The higher group, the higher the premium. These groups are defined by a number of factors, such as:

The cost to repair certain body parts
The ease of replacement of certain body parts
The ease to find certain replacement body parts
The acceleration of the vehicle
The value of the car when new
The car's resistance to theft

By collating this information, a sliding scale is calculated for the car which will ultimately correspond to the premium necessary to cover the vehicle.