How insurance works
To work out the price of your insurance, we weigh up several factors. Some factors are specific to you, including the chances of you making a claim. Other factors are to do with the world around you and what’s happening in the insurance market.
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.
On this page, we’ve explained these factors and how they affect your price.
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At a glance, where your money goes 1.
In 2018, the average car-insurance price increased. Here’s a breakdown to help explain what makes up the average price.
- 75.0% Claims costs – the amount Aviva pay out in claims
- 11.0% Insurance Premium Tax
- 8.0% The profit that Aviva makes
- 6.0% Operating and marketing costs, such as contact centres and online support
Claim costs count for the majority of our outlays. Here’s a breakdown of the cost of car-insurance claims.
- 42.0% Third-party personal injury eg. whiplash claims
- 26.0% Own car damage
- 24.0% Third-party car damage
- 6.0% Theft and fire
- 2.0% Windscreen damage
Save money on your car insurance
Get a safe-driving discount with Aviva Drive
Our free app, Aviva Drive, monitors your driving behaviours. After 200 miles you’ll be awarded a safe-driving score, and could qualify for a discount on your premium 2.
Cover up to 5 vehicles on one policy and save 10% on your car insurance premiums. We’ll even keep your no-claims discount separate for each of your vehicles 3.
How you affect your price
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
When working out your premium, we’ll factor in your postcode and individual address. We’ll look at claims, traffic, theft and malicious damage in your neighbourhood. More accidents, so more claims, in a given area, may drive up car-insurance costs inside it.
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.
Protectable no-claim discount
If you don’t claim, that tells us you’re a safer driver, and we factor that in to your price. For an extra cost, you can protect your no-claim discount, and reduce the impact a future claim could have on your next renewal price.
Any previous claims
When setting your premium, we look at your claims’ history, including accidents and/or claims in the last 4 years.
Any driving convictions
To help decide your price, we consider any driving convictions you may have. Our experience shows that those with driving convictions are more likely to claim, so their prices are likely to be higher.
Who’ll drive your car
When working out your price we consider the driver's age, and any convictions or claims. Statistics show younger drivers are a higher risk, and so are likely to cost more to insure.
How events affect your price
Long cold or wet spells can increase the amount and severity of claims. Ice and water can lead to more accidents as people don't always change their driving behaviour for the conditons. Like other insureres, we reguarly review the level of future claims costs resulting from severe weather.
More expensive repair costs
It’s getting more expensive to buy car parts and pay for repairs. This increases the cost of providing insurance and the price you pay.
Changing claims market
For example, numbers of personal-injury claims, including whiplash, are much higher in the last decade, driving up the cost of car insurance market-wide. We reckon how much we’re likely to pay in future claims, and factor this into customers’ prices. Third-party claims also have an effect.
Changes in the law
Changes in Government laws and industry regulations can affect prices. For example, in 2015 the Government proposed to remove compensation for minor whiplash, and also lawyers from minor-injury claims. In 2017, we passed on all savings from these reforms to Aviva customers.
Numbers of claims in the market
More claims can increase our costs, and lead to higher prices. We’re very open and transparent about our customers’ claims experience. As shown on our website, our average review left by customers buying or claiming on our car insurance was 4.6 out of 5 (as at 1 December 2019).
Rising taxes and other costs
For example, in 2017, the Government increased Insurance Premium Tax from 10% to 12%, forcing up prices across the market. Your premium includes costs for current customer services, such as contact centres and online support, and for investing in future products and services.