“Why is my car insurance so expensive?” is a question we often encounter on motoring forums and Facebook Groups. To help you understand your premiums and how the price is generated, we’ve put together a helpful guide on the core factors considered by insurers when issuing a quote.
Vehicle value
Without stating the obvious, the vehicle value makes up a large part of the insurance premium you pay. If your car is worth a lot of money, it will cost a lot to repair or replace, which means the premium has to contribute towards the potential cost.
Remember: if it’s a classic car and the parts are difficult to source – and are therefore more expensive – your insurance premiums may also reflect this.
Levels of cover
The level of cover you choose will also have an impact.
Fully comprehensive policies could be more expensive because there is a higher level of risk involved on the insurer’s part. If there is an insured incident, they may be required to cover both your losses and those of a third party.
A third-party, fire and theft policy, on the other hand, only pays out for damages suffered by other people if you’re at fault, which makes claims less expensive.
Excess
The total excess payable in the event of a claim depends on the following factors:
- Compulsory Excess: The excess set by the insurer
- Voluntary Excess: The amount of excess you opt to pay in addition to the compulsory excess. Adding a voluntary excess may reduce the overall insurance premium.
- Young/Inexperienced Driver Excess: The amount you will have to pay in addition to the above.
Your total excess is all of the above added together.
The level of voluntary excess selected will affect your motor insurance premiums. The excess refers to the amount you will have to pay in the event of a claim.
The higher your excess, the cheaper your insurance tends to be. That’s because it reduces the risk for the insurer; the more you pay, the less they will need to contribute in the event of a claim.
Excess Protector
The majority of insurers now offer an optional additional product called Excess Protector. In the event of a claim, this policy will allow you to recover the excess you paid, even in the event of a fault claim. The cost of this product will depend on the total excess you have in place, but our prices range from £20 to £50. Get a quote online.
Vehicle use
If you only rarely use your car, your insurance may be cheaper. That’s because you are on the road less and are therefore less likely to make a claim. For that reason, Social, Domestic and Pleasure (SDP) cover tends to be cheaper than SDP+ Commuting insurance.
Adding business use to the policy (i.e. driving your car for work) will add to the price. For the same reasons, your estimated annual mileage will also affect the premium you are quoted.
No claims bonus
The more years claim-free you have, the better.
Protected No Claims Bonus
You can pay an additional premium to protect your no-claims bonus. Having protection allows you to have a certain number of claims within a set period (varies with each insurer) without affecting your bonus.
Experience
Your experience with a particular type of vehicle can also have an impact on price.
If you have a vehicle with a powerful engine, for example, you may find it difficult to control if you don’t have much experience with it. Insurers may therefore want to know how many years of driving experience you have, or whether you have with a similar performance vehicle.
The more experience you have, the less risk you are and the cheaper your insurance is likely to be.
Modifications
If you have made any changes to the car, so it differs from the manufacturer’s specifications, you could see an increase in your insurance premium. There are so many possible changes you could make that we can’t cover them all here, but you must inform your insurer of any modifications so they can adjust your insurance accordingly. Find out more about insurance for modified cars.
Your health
If you have a ‘notifiable’ health condition, such as diabetes or heart problems, you are required to inform the DVLA by law. That’s because some conditions can have an impact on your ability to drive, which may then have a knock-on effect on your Motor Insurance. Check if a health condition affects your driving online.
Convictions
It doesn’t matter whether your convictions were motoring-related or not – unspent convictions will affect the price of your insurance. Why? Because you will be viewed as more of a risk to the insurer.
Employment
That’s right, your job may affect the cost of your insurance. Certain occupations are viewed as being a higher risk than others, which may affect the cost of your insurance.
Location
Where you keep your car can have an impact on the price of your insurance. That’s because insurers use aggregated data to identify areas with particularly high numbers of incidents. For instance, if there’s a high number of vehicle thefts in your area, it may cause the insurance costs to increase.
Club membership
Being a member of a car club or forum can have benefits when it comes to insurance. Membership demonstrates that you are passionate about your vehicle and are therefore more likely to take care of it. Thanks to our relationships with a number of car clubs and forums, here at CKI we are able to arrange preferential rates for many members of car organisations. Learn more about Insurance for Car Club Members.
Ancillary Products
Most brokers/insurers will have a suite of optional additional products available such as:
For further information regarding any of these products, please call the team on 0800 917 2274.
Tax
All insurance products are subject to Insurance Premium Tax. At present, it is 12%, which is added to most Motor Insurance policies (although a higher 20% rate is sometimes applied). The government may change this from time to time, which will affect the final cost of your policy.
Using a broker
An experienced, independent insurance broker has access to all Motor Insurance policies on the market and can help you to find the right one to meet your needs – and your budget. In some cases, the broker may even have a relationship with an insurer, which allows for preferential rates of cover (as with car club membership).
If you’d like help finding your next Car Insurance policy, be sure to speak to the Chris Knott Insurance team for free on 0800 917 2274. Our customers saved more than £94 on average* on their policies in 2021 – see how much we can help you save today!
Read more: Where is your car insurer based?
*Based on an average client premium of £385.22. MI data from OpenGI. 1.1.22 – 30.06.22.
