There are several factors that contribute to the cost of your premium when you take out car insurance, many of which you might not even consider. Your premium depends on everything from your driving habits to the type of car you drive, and even where you park it. Understanding these factors can help you make smarter choices that may lower your costs.
Driving Record
Your driving history has a direct impact on your insurance costs. Insurers see you as a lower risk if you have a clean driving record, as it suggests you’re less likely to be involved in an accident.
Let’s say you’ve been driving for years without so much as a parking ticket. Insurers will notice this and view you as someone who drives carefully. On the flip side, if you’ve had accidents or points on your licence, expect to pay higher premiums. Even one speeding fine can push your rates up, as insurers are calculating the likelihood of future claims based on past behaviour. If you’re hoping to lower your premium, focus on maintaining a clean driving record. This not only keeps you safe but also saves you money over time.
Car Type and Value
The type of car you drive significantly affects your insurance premium. Expensive cars, high-performance models, and even certain makes and models of everyday cars can cost more to insure. The more valuable the car, the more it costs to replace, which means insurers charge more for coverage.
Take luxury sports cars like a Chevrolet Stingray. They look great and feel exhilarating to drive. However, they cost a lot more than a modest vehicle. A smaller, less expensive car, like an Audi A6 that’s known for safety features, may lower your premium. Consider balancing your desire for a flashy car with the financial reality of higher insurance costs.
Postcode and Parking
Where you live matters more than you might think. Insurers use your postcode to assess the risk level in your area, considering factors such as crime rates and accident statistics. Parking also plays a role. If you park on the street in a busy area, you’re more vulnerable to damage or theft. If you live in an area with high levels of car theft or frequent accidents, your premium will likely be higher.
Mileage and Usage
The more you drive, the higher the risk of being involved in an accident. Higher mileage means more time on the road, increasing the chance of a claim. Insurers will ask about your annual mileage when you apply for a policy. If you’re using your car for daily commuting or long trips, your premium will be higher than if you only drive on weekends.
No-Claims Discount
One of the best ways to reduce your car insurance premium is by building up a no-claims discount, i.e., if you go a year or more without making a claim, you can earn a discount, which might grow the longer you remain claim-free.
