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Your car insurance price explained

When setting the cost of your car insurance, we analyse all the factors that affect it. Some are specific to you, including the likelihood of you having to make a claim, while others are a result of our constantly changing world.

Every customer pays into a central pot, and if you make a claim we pay it out of that pot. If lots of people claim at once, the pot has to go further, which means prices go up. But whatever happens, we constantly review the way we calculate the cost of car insurance so we can make sure you get the best price.

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.

In the news

Car insurance prices can change a lot in a short space of time, and we do everything we can to keep the price down. But with the cost of providing your policy typically rising between 5% and 25% in the last year, we’ve unfortunately had to reflect this rise in the premiums we offer.

Many things cause this rise, but right now there are 2 big reasons:

Cost of injury claims on the up

The cost of bodily injury claims to other people as a result of an accident has continued to increase over the last few years. In addition, the Lord Chancellor recently changed how we calculate how much long-term compensation someone should get after being injured, which has pushed the cost up further. We will always provide full support to injured parties, and we’re working with other insurers and the government to make that support more affordable.

Insurance Premium Tax (IPT) increase

Insurance Premium Tax (IPT) is a tax on insurance products that has steadily increased in recent years. This rose again from 10% to 12% on 1 June 2017.

Of course, some things will always affect the price of your cover. See how both you and the world around you play a part in this below.

Check your price with MyAviva

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Price breakdown

In 2017, the average car insurance price increased. We’ve broken this down to help explain what makes up the average price:

  • 74% = Claims costs – the amount Aviva pay out in claims
  • 11% = Operating & Marketing costs such as contact centres and online support
  • 11% = Insurance Premium Tax
  • 4% = 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:

  • 44% = Third party personal injury e.g. whiplash claims
  • 24% = Third party car damage
  • 25% = Own car damage
  • 4% = Theft
  • 2% = Windscreen damage
  • 1% = Fire

Source: Calculations based on 2017 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, who score 7.1 plus on our free Aviva Drive app, save an average of £170 on their Aviva comprehensive car insurance - a saving achieved by 50% of them.*

Based on policies bought direct from Aviva between 1st January 2018 to 31st August 2018. 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

Insure all your vehicles – cars and vans – under one single policy. One document. One renewal date. Zero fuss. As an existing customer, you get 10% off when you buy a new car insurance policy. Discount doesn't apply to optional covers.

Existing car and van customers aren't eligible as they receive a MultiCar discount instead when they add a car to their existing policy. Discount might be removed or changed at any time.

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.

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 15 December 2018). It’s worth considering this when choosing your insurer.

IPT increase and other costs

In 2016 the Government announced an increase in IPT from 9.5% to 10% from October 2016 so all prices rose to allow for this increase. The Government also announced within the Autumn 2016 budget a further 2% increase from 10% to 12% which was implemented in June 2017.

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.