What are car insurance prices based on?

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Written by Michael Foote, Insurance and Finance Expert

Michael Foote is the founder of Quote Goat and has over 13 years experience working in the finance, insurance and currency sectors. Since launching Quote Goat he has appeared on TV as well as many of the largest online publications including Forbes, The Telegraph and The Metro. Prior to Quote Goat, he worked in finance in the city for a number of firms including HSBC.

Car insurance prices fall down to one main factor: how likely does your insurance provider think you are to make a claim? A simple question, yes, but with no simple answer.

The answer to this is affected by a number of different factors; from your age, where you live and the type of car you drive, insurance providers can calculate the chances of you having to claim on your car insurance in the future. The more likely you are to claim, the higher your insurance costs will be.

Some of these factors can seem unfair to drivers that have to pay more based on factors that they cannot change, but so far this is the most accurate way insurance companies have of calculating your premiums.


New drivers between the age of 17-25 will know first hand that age can have a drastic effect on the cost of insurance with young driver car insurance policies normally being some of the most expensive. Adult drivers are less likely to have an accident than a younger driver which is the main reason insurance providers look more kindly on older drivers with car insurance for drivers over 50 being significantly cheaper. Young drivers who choose powerful cars can see insurance costs that match the cost of the actual car so it is vital that you look at purchasing an appropriate car for your first vehicle if you fall into the younger age brackets.


Insurance providers use your address to study local statistics on general driving behaviours, how busy the area is, the crime rate – most notably around vehicle theft or vandalism – as well as the number of both legitimate and fraudulent claims made in the area.


Fortunately for female drivers they are statistically less likely to be involved in a car accident which is something that is reflected in car insurance costs. Women, on the whole, pay less on average than men for car insurance when all other aspects are taken into consideration.

The Vehicle

The vehicle itself has a number of categories which are assessed in order to calculate your insurance premiums including the value of the car, the power of the engine, any modifications that have been made and the desirability of the car itself.

Unfortunately, if your car is one that is deemed ‘desirable’ then it is considered more likely to be stolen and will result in higher insurance costs. More powerful cars are more likely to be involved in accidents as they are often driven at higher speeds and if you do make modifications to your car be sure to inform your insurer because if you don’t you may see your insurance voided.