How is your insurance premium calculated?


Car insurance can be an expensive business and can leave you wondering why the quotes you are getting are so high.  Also maybe, how is my car insurance calculated?  There are a number of reasons for this.  Insurers will look at your details and offer you a price based on your risk as a driver.  For example, if you have made a lot of claims in the past, insurers will deem you likely to claim again.  Consequently, you may see your premiums rise.

There are a number of factors that are taken into account when deciding the cost of your premium, some of which we will discuss below.

Driving experience

This may seem like an obvious point, but insurers do put a lot of weight on the amount of time you have spent behind the wheel.  This could be in the form of a No Claims Bonus- something that shows how long you have gone without making a claim.  This is a good measure for insurers to gauge how competent you are and how likely you are to make a claim.

You may have noticed that insurance tends to be a lot more expensive for young drivers, compared to more experienced drivers.  This is because they are judged to be the people most likely to have an accident as a result of their minimal experience.  New drivers also do not have an NCB, so it is harder to tell how likely they are to make a claim.

This also explains how age affects car insurance.  Although it is not age directly, it is the lack of experience you will have as a result of your age.

Going for years without claiming is a good way to build up driving experience and that illusive NCB.

Claims history and driving record

You may have noticed when organising your insurance after you have got a speeding penalty or some other road fine that your insurance has gone up all of a sudden.  This is the same with a claim, big or small as they stay on your record and insurers will be able to see them when offering you a price.

The increase in premium will entirely depend on what type of offence it was and how many you have.  For example, three drink driving fines will be more serious than one SP30.

However, it can be tempting to keep this information to yourself to keep your premium down, though you do need to disclose this information to your insurer.  If you don’t mention something, your insurance may be cancelled as the insurer will find out during the checks they carry out.

The type of car you drive

This is one that people don’t normally think about as impacting their insurance premium.  The engine size, the tyres and the horsepower will all have an effect on the price of your insurance.  Insurers know that the more powerful the vehicle, the more damage it can do on the roads.  They also know that it will be more expensive to replace parts and damages in the unfortunate event of a crash.

For example, if you drive a Lamborghini Aventador S, any claim you make for your car will be more than for someone driving a Fiat 500.  Due to higher speed capabilities as well, the Aventador will be able to do more damage in an accident.  All round, more expensive risk.

This is why the price of insurance goes up for more expensive cars.


Insurers will take into account any modifications you have made to your vehicle.  This could be a change to the engine, brakes, exhaust or even external changes to the appearance of your car.  These will all affect the price of your insurance, depending on whether you have augmented the speed or created more air resistance etc.

You have to declare changes you have made to the vehicle or else your insurer won’t pay if you claim.

For more information on modifications and car insurance, check out this article.


Location also plays a factor when it comes to car insurance.  Insurers will look at where you keep the car  in order to judge the theft and vandalism threats.  Keeping your car in a locked garage is a secure way to store your car.  However, leaving it on the road overnight is not.

The safer your car is overnight, the more likely you are to reduce your premium.

Annual mileage

Your annual mileage is a good indicator of how often you will be driving your car.  Quite simply, the more time behind the wheel each year, the more likely you are to have an accident.  This is purely due to an increased exposure to potential hazards.

Voluntary excess

The amount of voluntary excess you pay will be a factor into deciding the price of your insurance.  The higher you set your voluntary excess; the insurer will see that you’re willing to put more money on the line which ultimately disincentivizes you from claiming.


Insurers look at all of these factors before deciding on the right premium for you.  It is consequently very important that you disclose all details when organising your policy.  If you fail to so do, your insurance may be invalid, and your policy cancelled.  If you want any more details, call Quote Detective on 0333 222 4005 or head to our website.