car insurance factors

Car Insurance - Top 5 Biggest Price Changing Questions

There are tons of questions that you get asked when filling out a car insurance quote online. However, even though they all have an affect on the price of your insurance, there are really only a handful that make a major difference in cost.

Top 5 rating factor questions that affect the price of your quote

Here are the most important questions you get asked when completing a car insurance quote. These factors have the most dramatic affect on what you will pay.

1. No Claims Discount

This is by far the single largest rating factor affecting the price of your insurance. You earn one year of No Claims Discount (NCD) or No Claims Bonus as it is sometimes called, for every year you drive without making a claim.

From an insurance company perspective, this is a very important indicator as to how good a risk you are. Having 5 years or more NCD means you haven't claimed against your insurance policy in over 5 years, which is what insurance companies love.

Drivers that have multiple years of NCD are highly sought after by insurers and as such, underwriters try to attract this business by offering significant discounts.

Some companies can offer up to 75% discount for full NCD (typically 5 years+). Even just 1 year NCD can get you up to 25% discount.

So, the best way to keep down the cost of your car insurance is by not claiming and building up the number of No Claims Discount years.

*Example:

No Claims Discount table:

NCD Years Discount
0 0%
1 25%
2 35%
3 50%
4 60%
5 75%

*for illustration purposes only

2. Age of driver

We all know that young drivers, particularly teenage drivers, get hit the most with hefty increases on the cost of their car insurance. Unfortunately the statistics show that young drivers are more likely to be involved in an accident, which is why insurers apply such a heavy weighting to age.

Conversely, more mature drivers aged approximately 25 - 70, can attract discounted rates, as they are perceived to be more experienced and more risk-averse.

As people get older and hit their 70's, insurance companies tend to start increasing their rates again as they are now perceived as having slower reactions and are therefore increasingly likely to be involved in an accident.

Obviously there is nothing you can do about your age. However, young drivers can keep their cost down through other ways such as driving lower insurance group cars and adding a more mature and experienced named driver.

*Car insurance cost and claim data by age:

Car insurance by age

*Source: Association of British Insurers (ABI)

3. Make and model of car

The third largest rating factor is the actual car you're insuring. With tens of thousands of cars, insurance companies divide them up into one of fifty groups.

Cars in insurance Group 1 are the lowest rated and the cheapest to insure. Cars in insurance Group 50 will be the most expensive to insure and are often makes such as Ferrari or Porsche.

The insurance group is decided based on a number of individual characteristics such as the engine size, top speed, costs and availability of parts and of course the replacement value.

So, when buying your next car, take a close look as to which insurance group it falls into and factor this into the overall cost of ownership

Insurance Groups

4. Postcode

The postcode where you live is the fourth most significant factor affecting the price of your insurance. There are around 30 million individual postcodes in the UK and underwriters can rate down to that full postcode level if they wish. However, most companies generally keep their rating to the district level e.g. RH10.

Put simply, a postcode that is perceived by the underwriter to be a high-risk area such as an inner city postcode that may be more susceptible to theft may attract a higher price weighting.

This is why many people are shocked when they find their car insurance premium has skyrocketed after moving house or perhaps has nosedived and become much cheaper. It's because the postcode has changed and as such, so has the risk profile.

If you're thinking of moving house, it's worth getting a new quote to see what the cost might be for the new postcode area. You may find the monthly insurance cost is too great an expense.

5. Driving convictions

Finally, the last biggest rating factor taken into account are the driving convictions you and your named drivers have on their license.

In fact, some driving convictions such as drug or drink driving offences, driving without insurance and dangerous driving, can be the most significant rating factor for a number of companies who may refuse to quote you at all or hike up your cost to an unreasonable amount.

Summary

The top five factors above are the most significant questions asked that affect your premium. However, there are potentially another 30 or so different pieces of information that go towards your final premium calculation.

With all these questions you should always be honest. Avoid the temptation to give wrong answers in order to get cheap quotes. It is illegal to give false details and your insurance could be invalidated.

Instead, shop around, follow these tips and ensure you get quotes from as much of the market as you can. Using a price comparison site such as the one used by PocketRate is by far the best way to quickly scour the market and get tons of quotes.