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There are many factors that can have an impact on car insurance rates. Whether it’s due to age, credit score or the rising cost of materials, insurance prices can vary dramatically from case to case. Some factors are more specific to the driver, but some are having an impact on all drivers, causing average insurance premiums to rise. Whilst temporary car insurance can be a good alternative to cut annual costs, insurance criteria will still impact the price you have to pay…

Why Have Insurance Prices Gone Up?

The average cost of UK car insurance rose by 12% in the last three months of 2023 to £627. When comparing averages year on year, insurance premiums were 25% more expensive in 2023 than they were in 2022. The continued rise in costs has led to many drivers struggling to afford insurance. 

Part of the reason for this is the increased costs of raw materials, car paint, and repairs for vehicles. According to the ABI, the cost of repairs has risen by a third since 2023, and replacement car parts have risen in cost by 12% to 21% too. Insurers have also reported an increased number of claims being made. In fact, there was a 29% increase in claims paid out in the second quarter of 2023 compared to the same period in 2022, resulting in a whopping £2.5 billion in payouts from insurers.

This all means that fixing and replacing cars has become more expensive, and more claims are being made. This means insurers are paying out more and more often. Hence, insurance costs have gone up to compensate for more money being paid out.

These factors impact average insurance rates for all drivers, but there are also individual factors insurers will always consider when you apply. These factors will also affect the price you are given.

Factors that Affect Insurance Costs

Insurers look at a range of criteria when calculating the price of insurance for each driver, it’s worth knowing what they are looking for when you search for insurance to get the best deal for yourself. Let’s look at some of the key factors that insurers will consider when calculating your premium. 

You should never lie about any of these factors to get a lower quote though. Doing so would invalidate your insurance policy, leaving you driving uninsured which is illegal.

Car Model

The age, value, and insurance group of your car all affect your insurance premium. Cars are categorised into insurance groups, based on their value, repair cost, safety, and performance. The insurance group your vehicle is in will be a determining factor in the price of your insurance.

Car Modifications

Car modifications affect the price of insurance too – for example, custom exhausts or tinted windows can raise the cost of your premiums. It’s important to let your insurer know of any modifications made, claims can be refused if this information is omitted.

On the bright side, some safe modifications such as parking sensors can actually bring the cost down.

Your Age

Younger drivers under the age of 25 will typically face higher insurance costs due to lack of experience on the roads. Insurers see them as a higher risk for accidents, which means higher insurance costs. Temporary insurance for younger drivers can be a good alternative to paying for hefty annual costs, if they don’t drive all that often. 

It’s not just younger drivers that can see higher costs though, drivers over  75 will be charged more too, as they are also considered higher-risk.

Your Location

Where you’re based also has an impact on insurance costs. Insurers look at the average number of claims in an area, and how many of these claims are fraudulent when calculating costs. 

They also consider the crime rate of an area, how many accidents happen and how busy an area is. That’s why you might find car insurance in a city is more expensive than in rural areas.

Where You Keep Your Car

It’s not just the area in which you live that affects the cost of insurance, it is also where you typically park your car. Cars that are parked on public roads rather than private garages or driveways are more likely to be damaged or stolen, which will mean higher insurance costs.

Car Sharing

Sharing a vehicle with a partner or family member who has a no-claims history can bring insurance costs down. If you are ever sharing your car with someone temporarily though, we recommend getting them to use short-term insurance cover, as it won’t affect your no-claims discount and will be cheaper than adding them to your policy. 

Do not, however, add a main driver with good experience to the vehicle fraudulently, as this could lead to criminal convictions down the line and invalidate your insurance.

Your Occupation

Car insurance occupation categories also affect how much your insurance will cost. Some jobs may be viewed as high-risk, such as occupations that involve lots of time on the road, carrying specialist equipment in the vehicle, or driving at night for example. These types of roles would increase premiums. 

On the other hand, less risky roles that don’t involve a lot of travelling won’t raise prices. 

Even the job title comes into play here so be as specific as possible rather than opting for a more general term – do not provide false information though, that will invalidate your policy.

Your Driving Habits

Your driving habits will also affect your insurance costs – if you tend to drive more than the average driver, your chances of accidents increase along with wear and tear on your car, which leads to higher insurance prices. 

It’s important to be honest about your mileage when applying for insurance. If you are seeing higher costs due to the amount of time spent on the road, black box insurance offered by some insurers can reduce the policy costs by allowing them to check you are driving responsibly.

Your Driving History

Drivers with a long list of claims on their record will have higher insurance costs, as insurers will be less willing to insure someone with a bad track record. They will also look at points on your licence, previous suspensions and convictions. 

Insurers want drivers with clean records who won’t cause them any bother, so the better your driving history is, the better the insurance cost will be!

How Could Your Insurance Costs be Reduced?

To keep insurance costs down, there are a few things you can do, so you don’t have to break the bank getting yourself covered. 

Choose the Right Car

As previously mentioned, your choice of car will impact the cost of insurance. It’s a good idea to choose a small, safe, cheap car if you are trying to keep costs down. This is particularly good advice for choosing a good first car, younger drivers will face high costs anyway, so choosing a sensible car is important. Larger, more expensive vehicles will cost more to repair and due to their power, will have an increased chance of accidents, meaning prices will be higher.

Keep the Car Safe

Try to store your car in a garage or private driveway to keep them from being damaged or stolen. Also, it’s a good idea to install safety modifications, such as a tracker, parking sensors,  or a dash cam. Increasing how safe and secure your car is will reduce costs!

Maintain Your No-Claims Bonus

If you manage to go the year without making a claim, you’ll receive a no-claims bonus. This reduction in cost builds up the more years you rack up without a claim, meaning you’ll save money by driving safely.

If an annual policy isn’t suited to you, temporary insurance could be the thing you’ve been looking for. Temporary insurance allows drivers to choose from hourly insurance, to monthly policies instead of annually, making for a much more flexible and affordable product. 

This is a great option for drivers who don’t drive all-year round, or for drivers who are looking to car share. You can get a quote in under two minutes today! 

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