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Your car insurance price explained

There are lots of different factors that affect your premium. Some revolve around you. And others are as a result of our constantly changing world. We use our experience and expertise to analyse these factors, and calculate an insurance premium (your price) that’s specific for you. Our view of how to price each policy may differ from other insurers.

How you affect your price

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

How the world around you affects your price

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

How you affect your price

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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

The neighbourhood you live in will be taken into account in the price you pay. Some areas have accident black spots or more traffic depending where you live, which is likely to result in more claims. So it could cost more to insure vehicles in these areas.

The car you drive

We’re all unique - some of us love sporty cars with high powered engines, while some of us just want a car that can get us from A to B. Each vehicle type will lead to a different price. We use our knowledge and experience of different vehicles, as well as numerous other factors, to inform the price you pay. For example, younger drivers with high powered vehicles are often more likely to claim, and so car insurance is likely to cost more.

Your No Claim Discount

If you don’t claim, this shows you’re a safer driver, and we factor this in to the price.

Your previous claims

Our previous claims experience shows customers who make a claim are often more likely to make further claims – and this is likely to increase the price they pay. You can, however, pay extra to protect your No Claim Discount (NCD) and reduce the impact that a future claim would have on your next renewal price.

Your driving convictions

If you get caught for speeding or have other driving convictions, then you need to let us know. Our experience shows that people with driving convictions are more likely to claim, and this is why your price is likely to increase.

How the world around you affects your price

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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 this.

Parts and repair costs have gone up

Whether it’s shopping or bills, lots of costs are going up. It’s also getting more expensive to buy car parts and pay for repairs. This 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, between 2005 and 2011 the number of personal injury claims including whiplash rose significantly, and this drove up the cost of car insurance across the market. We estimate how much we’re likely to pay in claims in the future, before incorporating this cost into customers’ prices.

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 new legislation in 2012 prevented insurers from using gender to influence a price for car insurance, people’s prices were affected – some went up and others came down. 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 (Average 4.5 out of 5 as at 8 July 15).

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