How are car insurance premiums calculated?

There are many factors that affect the price we pay to insure our cars. These include our driving history including any driving convictions we have collected and insurance claims that we have made, our age, our gender, and the type of car that we drive. The following summarises the effects that these have on our insurance premiums.


Age is one of the most important factors in determining insurance premiums for younger drivers, particularly for the 17 to 25 age group. The reason is simple; young people, especially young men, have a disproportionate number of accidents, therefore it is to be expected that they pay disproportionally high premiums.


In general women, especially younger women, pay considerably less to insure their car than men. This is especially true for women in the 17 to 25 age group where car insurance for women can be half as expensive as for a male of corresponding age and driving experience. However that will all change later this year when a recent European Court of Justice ruling becomes law. This makes it illegal for gender to be taken into consideration when setting insurance premiums. The effect will be that young women will have to pay for the appalling accident record of young men.
Type of car

The type of car that you drive has a large bearing on the cost of car insurance. All cars are assigned an insurance grouping depending on a number of factors which include the cost of repairing the car, the average time it takes to effect a repair, the cars performance in terms of top speed and 0 to 62 mph acceleration time, and the quality of the car’s security systems.
All cars are assigned an insurance grouping from 1 to 50 and the higher the grouping the more expensive it is to insure. Typically small city cars are in the lower range, larger family saloons and executive cars are in the mid range and high performance cars are in the top range. High performance car insurance can be very expensive, but there companies that specialise in insuring these kinds of cars at reasonable rates.
Insurance claims

The more claims that you make, the more you will be charged for your premium, but if you can avoid making claims for an extended period you can build up a no claims discount which can reduce your premium by 50 percent or more. It is even possible to protect your no claims discount so that you don’t lose it in the event that you do need to make a claim.

Driving convictions

Driving convictions have a significant effect on insurance costs; though the amount depends on the number and type of convictions that you have had over the previous five years. A drink driving conviction will have a much greater impact than a simple speeding offence.