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The main factors which increase your car insurance premium

When figuring out how much to charge for car insurance every month, insurance companies don’t pluck the amount from thin air.

Car insurance premiums are calculations based on many factors, any of which can affect the amount you pay every month. By understanding the factors which increase your premium, you can try to avoid adding costs you could easily avoid.

The Main Factors

Age and Experience

The younger the driver, the more insurance companies will charge for insurance due to statistics alone.

New drivers are the riskiest category when it comes to car insurance, with the World Health Organization citing injuries from road traffic accidents as the leading cause of death in people aged between 15 and 29 years.

After age 25, insurance rates can drop as much as 20 percent in the right circumstances, however, elderly drivers are also a high-risk group and pay more for their insurance premiums due to their advanced age.

Coverage, Excess, and Shopping Around

The more coverage you need, the higher your premiums will be since the insurance company is taking on additional risk with your escalated coverage. Make sure you know the minimum requirements and compare quotes to see if higher protection and coverage makes financial sense for your situation.

The main types of car insurance policies are:

  • Third-Party Only
  • Third-Party Fire & Theft
  • Fully Comprehensive

Make sure you know the difference between each type of policy and choose the one that fits the way you use your car. In the UK, you must legally have a minimum of Third-Party Only cover for any vehicle used on public roads.

Keep in mind that the higher you set your excess, the lower your monthly premiums will be. Higher excess amounts do affect the amount you will be out-of-pocket in the event of an accident, which is something to bear in mind.  Use a price comparison site like to easily compare policies in one place.

Vehicle Type and Use

Vehicles in the UK fall into one of 50 different insurance groups, as designed by members of Lloyds Market Association (LMA) and the Association of British Insurers (ABI).

Exempt from these groups are imports, kit cars, and some classic cars, which have their own categories and insurance ratings. The general groups, however, are used by insurance companies as one of the main factors which increase your car insurance premiums.

The categories factor in:

  • New vehicle price
  • Cost and availability of replacement parts
  • Repair costs factory by time
  • Engine size and performance
  • Security and safety features as standard

If you are about to buy a vehicle, knowing which insurance group it falls into will help you work out how cheap your monthly car insurance premiums will be.

In combination with your age and other risk factors, the type of car you are going to insure is a major factor when an insurance company calculates your monthly premium.

Other factors that can affect your car insurance premium are medical conditions, undergoing road safety tests, and installing a “black box” that records your driving habits.

You can’t control your age, experience, medical condition, and other factors, but you can control some things that affect your car insurance premium.

Maintain a safe driving record, purchase a vehicle that is in a low group rating, and by all means shop around for the right coverage and get more than one quote! 

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