Five factors that can affect your insurance premium

Written by Sean Cole

Published on

Insurance premiums can be confusing.

I mean, how do we insurance providers calculate them? What sorts of things do we look at? And, importantly, what can you control to drive your monthly and annual premiums down?

We’re going to share five things that can affect your premium. Both inside and outside your vehicle.

1. What you do for a living

Did you know that recruitment consultants, designers and social workers are the top three most expensive job titles for insurance premiums? And, ‘driver’, interestingly, ranks as the least expensive. Now, how does that make sense?

Well, your occupation not only lets insurance providers know more about you as an individual but also lets them know how likely you are to make a claim - due to factors like being seen to drive more.

It can get confusing though. Similar job titles can result in different premiums.

Construction workers and bricklayers or chefs and kitchen staff, for example, are all similar but not the same so it’s important to be as specific as possible.

In some cases, your job title might fit in more than one category. Get quotes for all of them. Remember that the details you give your desired insurance provider should always be as accurate as possible otherwise your policy might be invalid.

2. How far and often you drive

This one shouldn’t be too surprising. Insurance is based on risk.

The more miles and more often you drive, the more likely you’ll be involved in an accident and need to make a claim. Simply, the higher your annual mileage, the higher your insurance premium is likely to cost.

In 2020, UK motorists drove on average 6533 miles each. Here’s how you can work out your mileage so you’re not shocked at renewal:

  • MOT Certificate: Your annual MOT certificate will show the miles you drove the year before. Use this to guide your estimated mileage for the coming year.
  • In your logbook: Your vehicle’s mileage is always noted in your logbook after every annual service.
  • Note down your mileage: As soon as you take out a policy, note the mileage on your vehicle's dashboard. That way you can see how many miles you've driven up to the date of your next renewal.

3. Where you live

Your address matters. Insurance providers look at local statistics including driving behaviour, crime rate, and the average number of legitimate (and fraudulent) claims.

They use this information to work out how likely you are to make a claim.

4. The make and model of your vehicle

All vehicles are categorised into insurance groups, which play a role in calculating your premium. One factor that insurers use to group vehicles is price.

The more expensive your vehicle is, the higher the cost to your insurance provider if you need to make a claim or if your car is ever written off.

You also need to let your insurance provider know about any necessary (or unnecessary) car modifications as this can also affect your insurance.

5. No Claim Discount (NCD)

That’s right! For every year you drive without claiming, your insurance provider gives you an extra year of no claims discount. Reducing the cost when you choose to renew.

The longer you drive without claiming on your insurance, the bigger the discount on your premium could be. Simple.

For example, your insurance provider could offer a discount of 30% on your premiums if you can prove you’ve been claim free for a year. If you’ve been claim-free for five years or more, this discount could rise to 70%.

If you do claim on your insurance and your provider pays out, your NCD is typically reduced by up to three years. This can be reduced further if you make two or more claims.

6. Driving History

Last but by no means least. Your driving record is one of the main factors that insurance providers use to work out your premium.

The more accidents and tickets you have, the riskier you are to insure. And, unfortunately, most insurers will quote you a higher rate because of this poor driving history.

Don’t worry. A poor ‘driver history’ doesn’t mean you’ll always have to pay more. Here are some things you can do to drive those premiums down:

  • Get a Sense policy: our Sense technology lets us track your driving, and price your risk more accurately. We use your location and motion data from your phone’s inbuilt sensors to monitor your driving behaviours whenever you’re driving. It picks up on the frequency of factors like harsh braking, aggressive acceleration and sharp cornering, combining this data to create your driver score on a rolling basis.
  • Increase your voluntary excess: This means you’ll pay a specified amount on top of the compulsory excess if you need to make a claim. The higher the voluntary excess, the lower your car insurance premium could be.
  • Driving less far, less often: In the eyes of insurance providers, the more often you drive, the higher your risk of getting into a car accident. Drive less, pay less. Simple.
  • Invest in your vehicle security: Reduce the risk of your vehicle being stolen, by installing an alarm or an immobiliser. These additions could take pounds off your premium.

Learn more about Sense and our Driver Score,  and how our technology can help you improve your driving and premiums.