How is car insurance worked out?

All the details you provide go into a giant bingo machine powered by evil hamsters and a golden egg then comes out with a ‘DING!’ to reveal a random price inside.

Weeeelll…not quite. But if you don’t really understand how your car insurance quote is worked out, it can feel a lot like that. Here’s a few basics that go into making your insurance cost what it does.

1. Your car – (duh)

So, obviously, the type of car you want to insure is going to play a big part in this and there’s many reasons for that.

First, its value. If you’re driving a brand-new expensive car it’s going to cost more to repair the parts or replace them than an older, less flashy one.

If the car is rare, the parts will be harder to find, which – you guessed it – means it will be more expensive to insure. How much it would cost the insurer if you had a crash or the car was stolen is a big thing that goes into your price.

The power under the bonnet also has an impact. The bigger the engine, the more expensive it usually is to insure.

One that drivers probably forget is desirability. If the car is hot stuff, it’s likely it will catch the eye of Mr Car Thief too. Moral of the story: go for a slightly less sexy car the first time round.

2. Your age

Yep, it’s annoying, but young drivers are statistically more likely to have a crash, which is why under 25s face higher insurance prices.

It’s not always the case that older drivers have cheaper insurance prices but generally it all boils down to how much experience you have on the road.

That’s why ingenie exists: we provide insurance for young drivers that lets them pay based on how they drive – not how their age group drives.

Typically, black box insurers will give you a better quote upfront because they’ll be able to see how you do over the year. It means you’re given the benefit of the doubt from the start – a rare approach in insurance.

3. Your postcode

The area you live in affects your insurance – basically because of what goes on around town.

If your postcode is in an area with lots of car theft or you live on a stretch of road where there’s been lots of crashes, unfortunately that’s another thing that goes towards the price.

4. Your occupation

Don’t be offended – this isn’t anything to do with how much you earn. It’s all about how much time you spend on the road and what you’re likely to carry with you.

If you’ve got high tech tools in the boot and you’re having to drive across the country every day, your insurance could be higher than a customer service adviser who parks in a staff car park on a Thursday morning shift.

If your job requires you to drive a lot or during really busy times, that’s also something that can affect your insurance quote. Commuting to work through rush hour is a high-risk time, so that’s something your quote will take into account.

5. Your driving history

This one doesn’t take much explaining but it really boils down to claims history.

If you’ve only just started driving it means you haven’t built up a No Claims Discount yet. Not great, because the insurer doesn’t know if you’re likely to crash early on – but it does mean a clean slate with no black marks to your name. As long as you didn’t do anything naughty when you were learning…

Any driving convictions or claims are going to have an effect on your premium – it’s as simple as that. Something like drink driving could actually keep your insurance high for several years. That’s the better outcome; some insurers may not even offer you a quote at all.

If you’ve been working hard on building up a No Claims Discount, that will really help in reducing the cost. It’s like a fast track certificate to tell the insurer you’re a safe driver and a low risk.

Many new drivers opt for having a named driver on their first insurance policy (usually Mum or Dad) because it does tend to make it cheaper. But that means their driving history is a factor here too.

If Dad got caught driving over the speed limit a few years ago or Mum reversed into someone in the supermarket car park, just remember you do have to tell your insurer about that too.

6. Your licence

Whether you have a provisional or full licence has a big impact on your premium. You’ve passed your test, great – so your insurance should be cheaper, right? ‘Fraid not.

Insurers know you’ll be driving on your own now and more often, without the luxury of dual controls or Dad sat next to you with an extra pair of eyes. Upgrading to a pink licence typically means more miles and, combined with setting off all on your own, spells out the dreaded R word again. RISK.

To avoid any nasty surprises it’s always smart to get two quotes to get an idea of any price jump; one on a provisional licence and one on a full licence with all the other details identical.

Obviously prices change on a regular basis, so the price you get now may be different when you pass your test, but getting a rough idea of what it will cost you should keep that ‘just passed’ bubble of excitement from bursting.

Concentrate on getting your details right

There are LOADS more factors that go into calculating your premium (your excess, what you use your car for, where you keep the car at night) but these are the main ones.

There’s no way of predicting exactly what your car insurance will cost you and, because insurers regularly update their prices, it could be different from day to day. The best thing to do is shop around, try different cars and get all your details spot on.

Just remember: being covered in case you crash is the most important thing and pretty much the reason behind buying car insurance. Please don't be tempted to gloss over the facts to save a few quid now – it could cost you big-time later on.