All kinds of vehicle insurance are basically quite simple.

The idea is you pay the insurance company a yearly ‘premium’. In return for this premium, the insurance company agree to pay the costs if you have an accident.

As you can imagine, these costs can be quite substantial. Even a small bump can involve car body repairs costing several hundred pounds. A serious accident may cost several thousand pounds and if someone is so seriously hurt they require long term care, it may even be hundreds of thousands of pounds.

So you can see that getting the right insurance is a serious business. You can also see that the insurance company is going to weigh up the risk very carefully. You give them a few hundred or, maybe, thousand pounds on premium, and they are taking the risk it may finish up costing them a great deal of money if you have a serious accident.

So, naturally, they are going to assess you as a driver very carefully indeed. And the more likely they think it will be you may have an accident, the higher they are going to make your premium to make up for that risk.

So... what kind of things do they look for to assess how likely they think you are to have an accident - or how high a ‘risk’ you are?

The most significant things are age, driving record and type of car.

Research shows that young drivers are significantly more likely to have an accident than older drivers. This is because of their lack of driving experience and, in some cases, attitude to safety. Because of this, insurers will charge young drivers a significantly higher premium than mature drivers - particularly very young drivers (17 or 18) with little or no driving history. See our advice on how to keep premiums for young drivers down.

Driving record:
If a driver has a history of driving offences, the insurance company will take this into account when deciding how likely they think it is that driver will have an accident. This makes sense. If a driver has shown he/she has a habit of speeding or careless driving, they are indeed more likely to have an accident. The worse the driving record, the higher the premium.

Type of car:
The more powerful and expensive the car is, the higher the premium. Powerful cars tend to be driven faster and the risks increase as a result. Expensive cars cost more to repair in an accident - it’s as simple as that.

Other influences on the premium rate are:

Where you live. If you live in an area with a high number of car thefts or vandalism, say an inner city, you will pay a higher premium than someone who lives in a quiet country area with next to no thefts or vandalism.

How many miles you drive each year. It makes sense that the more you drive, the more likely your are to have an accident - just by the law of chances.

The size of your ‘excess’. The excess is the amount of money you will put towards any claim you make. Say, for example, you have to make a claim of £1,000. If your excess is £500, you pay £500 and the insurance company pays the balance - in this case £500. So, the larger your excess, the less the insurance company is risking and so they can charge you less in your premium.

Another big influence on the premium is the type of insurance cover you take. There are three basic levels; third party only, third party fire and theft, full comprehensive. For more information on the types of cover, click the link below.

Car insurance