How can I calculate a car insurance premium?

When it comes to budgeting, it’s useful to know what your outgoings are going to be in the future. As such, working out how to calculate your car insurance premium would be useful – especially if you could quickly consider the impact different cars might have.

Here, we’ll look at how car insurance rates are determined – and find the quickest way to get an accurate figure for your next car insurance policy. If you are looking for a car insurance quote, you can also obtain one via our website.

How a vehicle insurance premium is calculated

We’ve often contacted by people who want to know how to calculate a vehicle insurance premium – but unfortunately, it’s not a question we’re able to simply answer.

Although generating quotes to compare online might seem like a quick and easy process, there’s actually a huge amount of data being crunched behind the scenes when these calculations take place. 

What’s more, every insurer is slightly different – with slightly different approaches to calculating the risk that offering insurance presents. So, even if you could accurately work out what one provider will quote – other insurers could change significantly more or less.

What kind of information do insurers consider when they provide a price?

To say that there’s a lot of information that goes into providing an insurance quote is an understatement!
In fact, there is no way that any two people’s insurance quotes will be exactly the same – as there are variables that are directly linked to you, your driving history, your address, your exact age, and the specifics of the car you’re insuring.
It’s worth taking a look at some of the factors insurers will consider – so you’ve got an idea of quite how much information’s taken into account:

Your car

For insurance purposes, cars are given a ‘group’ rating – running from 1 to 50. Group 1 cars are the most cost-effective to insure – whereas group 50 is reserved for high-performance vehicles that cost significantly more.
Of course, it’s not just performance that dictates your insurance cost – the age and value of the car will have an influence too, as will and modifications you or a previous owner have made.

Your age

Car insurance relies heavily on statistics to decide which drivers represent the highest risk. If you’re young, you unfortunately fall into a higher-risk group – so you can expect your premium to be higher.

What you use your car for

If you’re using your car to commute in and out of a busy city every day – you can expect to pay more than if you just use your car for social, domestic, and pleasure driving. Insurers will consider your use and adjust your premium accordingly.

The miles you cover

Someone who does 20,000 miles each year is more likely to be involved in an accident than someone who does 5,000 – simply due to the amount of time they spend on the road. As such, the number of miles you’re going to cover will adjust your insurance price.

Your job

Some professions are deemed to be riskier than others when it comes to insurance quotes. You might think that a professional racing driver would be a safe driver – but in actual fact, Lewis Hamilton should probably expect to pay more for his insurance than a librarian or accountant, for example.

Your driving history

Although previous claims are likely to bump your insurance cost up – a lot of people don’t realise that even accidents you haven’t claimed for can increase your insurance costs. Statistically, insurers say you’re more likely to have another accident if you’ve been involved in one in the last 5 years – so both accidents and claims will increase your insurance premium.

Of course, it’s not just accidents that make up your driving history. If you have any points on your licence or driving convictions – you’ll find these will also increase your annual car insurance costs.

Where you live

If you live in an area that experiences a higher than average number of road traffic accidents or car thefts, this will be reflected in the amount you pay for your insurance.

Security

You’ll be pleased to hear that the right security can bring your policy premium down significantly – especially if it makes a desirable vehicle difficult to steal. Talk to your insurer and see what kind of products they accept – as the right alarm, immobiliser, tracker, or steering lock can reduce your monthly costs.

Driver statistics

Since there’s no way of looking into the future, insurers have to rely on past statistics for information about the likelihood of a person or particular vehicle being involved in an accident. It’s difficult to say exactly what the information will show from company to company – but it’s likely to involve statistics about different demographics, areas, and vehicle type.

Medical conditions

Certain medical conditions will unfortunately lead to higher premiums – and some might lead to insurance being withdrawn. Generally, conditions that impact your sight or your ability to stay awake or conscious will be seen as potentially dangerous if you’re still allowed to drive. As such, some types of diabetes, sleep apnoea, epilepsy, strokes, a heart condition, glaucoma, and others can increase your premium significantly.

How much excess you’re willing to pay

Your excess is the amount of money you’re willing to towards any repair your car needs in the event of a claim. The higher this figure, the less your insurance company is likely to need to pay – so you can expect your premium to reduce accordingly.

The level of cover you need

Different cover levels will make a big difference to your insurance costs too. For instance, a third party only policy means your insurer will only payout if you’ve caused an accident and damaged someone else’s car. Since this will be a smaller payout than the one needed if you had fully comprehensive cover and damaged your own car too, your premium will also be much lower.

How a vehicle insurance premium is calculated

As you can see – as well as there being a lot of different factors – each one of those factors has an almost infinite number of combinations of age, address, vehicle type, driving history – and so forth.

In short, the very best way to calculate your car insurance premium is to get a quote. When you do that through Car.co.uk, you’ll be able quickly compare a huge range of prices from our broad panel of insurers – so you can check that what you’re paying is in line with other providers, before picking the one that offers the right level of cover for you.