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Your car insurance price explained

Many different factors affect the price of your car insurance. Some are specific to you and others are as a result of our constantly changing world. We analyse all these factors to calculate a price that’s specific to you. We’re always reviewing the way we calculate car insurance so that we can make sure you get the best price for you. The price calculations used are different between all insurers.

How you affect your price

There are numerous factors specific to you that we use in calculating your price. Here are some examples.

How the world around you affects your price

Many factors influence insurance prices, in addition to your personal details. Here are some examples.

Price breakdown

In 2015, the average car insurance price increased. We’ve broken this down to help explain what makes up the average price:

  • 76% = Claims costs – the amount Aviva pay out in claims
  • 13% = Operating & Marketing costs such as contact centres and online support
  • 9% = Insurance Premium Tax
  • 2% = The profit that Aviva makes

As you can see, claims make up the biggest part of the average price so here’s a breakdown of the cost of car insurance claims:

  • 49% = Third party personal injury e.g. whiplash claims
  • 23% = Third party car damage
  • 22% = Own car damage
  • 3% = Theft
  • 2% = Windscreen damage
  • 1% = Fire

Source: Calculations based on 2015 Aviva motor insurance policies.

How to improve your car insurance price

Take the Aviva Drive challenge

Safe drivers should pay less for their car insurance, they can when they take the Aviva Drive challenge. Aviva Drive is a free app that monitors your driving behaviours including braking, cornering and acceleration. After 200 miles you’ll be awarded a safe driving score out of 10 and could qualify for a saving. Safer drivers scoring 7.1 or more can save an average of £150 on their Aviva comprehensive car insurance.

Saving achieved by 47% of those scoring 7.1 or more. Based on policies bought direct from Aviva from the 1st December 2015 to 30th June 2016. Discount is available on first car per policy and depends on score and price - minimum £200. Discount does not apply to optional extras. Compatible handset required. Data charges may apply.

Insure more than one car

If you’ve got more than one car to insure, it’s worth looking at MultiCar insurance. You can get up to 1 / 3 off, and you only need one policy, one renewal date, and one set of paperwork. 20% of customers are expected to achieve the highest saving.

Up to 1/3 off applied to the cheaper of the two vehicle insurance premiums. Discount does not apply to optional extras. Maximum 1/3 discount available on policies with either one driver, or two drivers who are domestic partners using their vehicles only for social domestic and pleasure. When you take the Aviva Drive challenge your Aviva Drive discount can only be used against the first car on your policy.

How far you drive

If you’re on the road more, you’re more likely to make a claim, as you’ll be driving more miles. Also, the nature of your journeys could affect your price. For example, if you use your car to commute to work when traffic is busy, insuring your car may cost more than if you only used your car socially.

Where you live

We’ll take the neighbourhood you live into account when we’re working out our premium. We assess each postcode and address individually, looking at claims, traffic, theft and malicious damage together with the frequency of accidents in your area. More accidents tend to result in more claims, so it could cost more to insure vehicles in those areas.

The car you drive

The kind of car you drive could lead to a different price. We look at all cars individually, using our industry experience and looking at the make, model, the age of the car, fuel type, transmission and engine size to determine the price you pay.

Your No Claim Discount

If you don’t claim, that tells us you’re a safer driver, and we factor that in to your price.

Your previous claims

Before we generate your premium, we look at your claims history, including accidents and/or claims in the last four years. For an additional cost, you can protect your no claim discount (NCD) and reduce the impact that a future claim could have on your next renewal price.

Your driving convictions

We consider your driving convictions to help determine your price. Our experience shows that people with driving convictions are more likely to claim, and this is why your price is likely to increase.

Who Will Drive Your Car

When reviewing your price we consider the drivers age, convictions and claims experience. Statistics show that younger drivers are a higher risk and it is therefore more likely to cost more.

How the world around you affects your price

Explore the features in detail below

Severe weather

We all know how extreme weather can affect the UK. Prolonged periods of cold weather or rain can increase the amount and severity of claims that we receive. Ice and wet weather can lead to more accidents as people don’t always change their driving behaviour for the conditions. Like other insurers, we regularly review the likely level of future claims costs resulting from severe weather.

Parts and repair costs have gone up

It’s getting more expensive to buy car parts and pay for repairs, which increases the cost of providing insurance and the price you pay.

Change in the nature of claims in the market

If the variety of claims we receive changes, our customers’ prices will also change. For example, the number of personal injury claims including whiplash have risen significantly over the last decade, and this drove the cost of car insurance up across the market. We estimate how much we’re likely to pay in claims in the future, before incorporating this cost into customers’ prices. Third party claims also have an affect.

Changes in the law

All insurers have to meet government and industry regulators’ rules. When new laws or regulations are introduced this can sometimes affect the price we charge. For example, in the 2015 Autumn Statement, the government proposed to remove compensation for minor whiplash and remove lawyers from minor injury claims. In 2017 we’re passing on 100% of the savings from these reforms to our customers. Future legislation could have similarly wide-ranging impacts.

Change in the number of claims in the market

We settle thousands of claims each month. If the number of claims increases, for example due to extreme weather events, this might increase our costs, and could lead to higher prices. We’re very open and transparent about our customers’ claims experience, and in October 2013 we became the first UK insurer to publish our customers’ claims ratings and reviews on our website. Our average review left by our customers for buying or claiming on our car insurance is 4.5 out of 5 (as at 14 April 2016). It’s worth considering this when choosing your insurer.

Back to motoring advice

IPT increase and other costs

Every price includes a contribution towards administrative and running costs, such as staff and buildings, as well as Insurance Premium Tax (IPT). Last year the Government announced an increase in IPT from 6% to 9.5% and from November 2015 all prices rose to allow for this increase. The Government also announced within the March budget a further 0.5% increase from 9.5% to 10% which will be implemented in October 2016.

Customers can access our products in a number of different ways and the price they pay will include some costs which go towards providing the services available, such as contact centres or online support, as well as investing in future products and services.