How do car insurance providers set their prices? Is there a universal way in which they calculate their rates? Yes and no.

Every insurance provider has a slightly different way of calculating rates. This is why different insurance companies will offer different quotes.

However, insurance companies mostly look at the same factors when setting their rates. Some of these factors are obvious, while others are more surprising. By understanding these factors, it’s possible to find ways to reduce your rates beyond simply shopping around.

So just what are the things that can affect your car insurance rates? This post explores 20 potential factors.

Claims history

Making a car insurance claim can increase your rates by 20% to 50% depending on the nature of the claim. Not making any claims can meanwhile result in you being rewarded with a no-claims bonus each year (although in recent years, general inflation has meant that most people haven’t experienced much of a bonus at all).

Driving convictions

Having previous driving convictions can greatly increase one’s insurance rates. Some insurers may even refuse to insure you if you have committed serious driving offences in recent years. Fortunately, there are companies that specialise in reliable car insurance for convicted drivers – so it’s not impossible to get insured with a driving conviction.

Credit score

A poor credit score could also lead to high car insurance premiums. Your credit score is determined largely by how well you keep on top of paying bills. Having lots of separate debts can also affect your credit score. There are low credit insurers out there, as well as schemes for quickly building credit.

Address

Your address affects your insurance rates too. Did you know that most car accidents occur within 5 miles of a driver’s home? Because of this, the rate of accidents in your area can affect your insurance premiums. A high rate of car theft can also affect rates for third party fire and theft insurance.

Property type

Homeowners can also access lower rates than renters. This is because homeowners are thought to be more ‘financially stable’ and less likely to default on payments. It’s an added perk to buying a property!

Age

Your age can also affect your rates. Drivers under 25 often pay 50% more than drivers aged 30, while drivers under 20 can pay even more. However, it’s not just young drivers who pay more – once you reach 65, you could find that your rates start to increase again. These rates are due to the fact that younger and older drivers are more likely to get into accidents.

Driving experience

How much driving experience you have is also important to consider. If you are 30 but have only been driving for 1 year, you will likely pay more than someone who has been driving for 10 years. This is simply because the accident rate is higher among newer drivers.

Marital status

Are you married? You could pay less than someone who is single or divorced. This is because statistically married individuals are more financially stable and less likely to make claims. Of course, you probably shouldn’t get married just to reduce your insurance rates!

Job title

Your job title can also impact your insurance rates. Certain jobs may require more driving and may be seen as more high risk. Examples of job titles that come with increased rates include ‘care worker’, ‘delivery driver’ and ‘construction worker’. It’s worth noting that it may be possible to reword your job title in some cases to bring down your insurance rates.

Additional drivers

Adding additional drivers to your insurance policy could increase or decrease your rates. If you’re a young new driver, adding an older experienced driver as an additional driver could reduce your rates – especially if they’re added as the main driver. Just be wary that falsely adding a more experienced driver is known as ‘fronting’ and can be viewed as a form of insurance fraud.

Vehicle model

The type of vehicle you insure affects your rates as much as your driver information. One big factor is your car’s model. Certain car models are involved in more accidents than others and can be seen as a greater risk. High performance vehicle models can be some of the most expensive cars to insure – especially if you’re a young driver.

Vehicle age

The age of your car can also affect your insurance rates. Generally speaking, older cars are cheaper to insure than newer cars. This is particularly the case if you’re taking out theft cover as newer cars are more likely to be stolen than older cars.

Vehicle value

The value of your vehicle plays a huge part towards your insurance rates. A car that is worth more is generally more expensive to insure. This is because an insurer is likely to have to pay out more in the event of total loss. When renewing your insurance, make sure to factor in depreciation when stating your car’s value.

Vehicle mileage

How many miles you are likely to drive your car each year can affect your insurance premiums too. The less you drive your car, the less risk there is of you getting into an accident, and therefore the cheaper your rates. If your circumstances have changed and you’re driving your car less regularly, make sure to update your mileage when you renew your insurance.

Vehicle modifications

Having certain modifications on your car could increase your rates. Some of the modifications that cause the biggest increase include turbochargers, suspension modifications, alloy wheels and spoilers. This is simply because these modifications are associated with ‘boy racers’, who are typically more likely to get into accidents. It’s worth noting that not all modifications can increase your rates, and some may decrease your rates by making you deemed lower risk such as installing a dash cam or improving brakes.

Parking location

Many insurers will ask you where you park your car. This is because where you park your car can affect your risk of getting into an accident. Using off-road parking such as a secure car park, driveway or garage can result in lower rates compared to parking on the kerb.

Deductible amount

The deductible is the amount of money you’re willing to pay out of your own pocket in the event of a claim. Choosing a higher deductible can reduce your insurance rates. However, it’s important that you choose a deductible that you can reasonably afford.

Payment frequency

How often you pay your car insurance could also affect your rates. Paying annually is generally cheaper in the long run than paying monthly. In fact, an annual payment typically costs the same as 10 or 11 monthly payments (so you’re getting one or two months free). The downside is that you need to be able to pay this full amount upfront, which most people cannot afford.

Coverage start date

Want to know a trick for making the biggest savings? If you don’t need to drive your car straight away, consider setting your coverage start date a week or two from now. This can yield an average saving of 14%! This is because insurers realise that you don’t need insurance immediately and therefore have more time to shop around – hence they’re more eager to offer you cheaper deals to win you over.

Renewal date

Similarly, instead of waiting for your insurance to automatically renew, consider renewing it manually a week or two in advance. This similarly allows you to set the coverage start data a couple weeks from now, which can result in similar savings.