Directory:How Car Insurance Companies Set Their Prices

Introduction

The price for car insurance is set out by the underwriting staff at each insurance company. This is why you get potentially different quotes for each company you contact. Underwriters have a vast amount of statistical information at their disposal, and this is what they use to determine the risk (cost) of insuring your particular make and model of car for you as an individual.

How much drivers pay for car insurance is determined by a number of factors which include:

   * Who will drive the car
   * The type of car you will be driving
   * Where the car is kept
   * What the car will be used for
   * The type of cover you need

All of these factors are used to calculate your risk as a driver. Obviously can't change your age or gender, so you need to be smart and think about the factors you can influence. There are lots of things you can do to get cheap motor insurance[1] for drivers, such as choosing a lower risk model of car. If you want cheaper car insurance, you need to be thinking about what you can do to make yourself and your car less risky for the underwriters.

Named drivers - Any drivers you add to your policy can affect the amount you pay. This is because other named drivers are assessed on their driving history, age and gender.

Age and Experience - The younger or less experienced a driver you are, the more likely it is that you will have an accident and make a claim on your insurance policy.

Driving Convictions - Insurance companies take into account driving convictions as statistics show people with convictions are more likely to claim.

Driving history - If you have had a number of fault accidents in the past, insurers have found that you are more likely to have other fault accidents in the future, as it is probably a result of your driving style.

Occupation - what you do for a living can affect your insurance premium, those who use the cars as part of their job especially as they spend more time on the roads.

Car Insurance Group - vehicles are assigned an insurance group rating between 1 and 20 by the Association of British Insurers (ABI). The group assigned to your car is a measure of how expensive your car is to repair, how powerful it is and how secure it is.

Car Value - If your car is worth a lot, it will cost more for insurance companies to replace it if it is stolen.

Car Security - If you're car is a high risk for thieves then you should take precautions and install alarms/immobilisers.

Mileage - The fewer miles you drive, the less likely you are to have an accident and your insurance premium will reflect your lower usage.

Car Age - Older cars often attract discounts for comprehensive insurance premiums as the value of the car is lower.

No Claims Bonus - the more no claims that you have, the safer you are as a driver so your insurance will go down.