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Why is my car insurance so expensive?

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There are 2 main reasons why your car insurance is more expensive - economic reasons and personal risk factors. There isn’t much you can do about the former, but thankfully you can do something about the the latter. Here's more on what factors affect your insurance and how you can reduce your car insurance costs.

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Economic reasons and personal risk factors affect the price of your car insurance. Here's more detail on both:

Economic reasons 

There are several economic factors that influence the price of car insurance:

  • Insurance Premium Tax (IPT): This is a 12% tax that the government levies on all insurance policies.
  • Serious injury compensation: When people make a claim for a serious injury, like whiplash, insurers use the Ogden rate to calculate payouts. This can go up and down and has a direct impact on the cost of your cover.
  • Uninsured drivers: If you’re hit by an uninsured driver, you might be able to claim through the Motor Insurance Bureau (MIB). This impacts on other drivers’ insurance costs, as the MIB recoups the money by raising the costs of other drivers. 

Personal risk factors 

If an insurer thinks you’re high risk, they’re likely to charge more. When car insurance companies calculate your car insurance costs, some common risk factors include:

Car accidents

Even a minor accident could increase the cost of your insurance. If an accident was your fault you might expect a significant increase to your insurance costs. But even if it wasn’t your fault the cost of your cover might still go up. 

Points on your licence

Your insurance may go up if you’ve got points on your licence. Some points stay on your licence for several years, depending on the severity. Make sure you declare any points on your licence and the reason for them to your insurer. If you don’t disclose them, your insurer might not pay out if you need to claim.

Car modifications

Car modifications can affect the cost of your car insurance. Some of the most common modifications according to our data are:

  • Non standard alloy wheels
  • Non standard exhaust manifold
  • Darkened rear window 
  • Lowered suspension
  • Non standard filters
  • Rear spoilers

Car modifications make cars more attractive to thieves, which increases their chance of being stolen.

Other modifications might increase the speed and power of the car, which puts you at more risk of being involved in an accident. What counts as a modification varies between insurers, as does the additional cost. 

Some insurers offer modified car insurance specifically for modified vehicles, too.

Your occupation

Insurers have data attached to each type of occupation. So, different jobs might be at higher risk, even if the job doesn’t involve driving.

Your car’s value

You usually pay higher insurance for your car if it’s more valuable, as the parts are likely to be more expensive to repair or replace. More valuable cars are also more likely to be stolen.

Your age

Car insurance for young drivers is usually so high because they're generally less experienced behind the wheel than older drivers.

They also tend to make more expensive claims. According to our data, the average claim value for under 25s is £2.300*. For over 65s it’s £1,800*. 

Because young drivers have a high claim risk, the cost of car insurance is more expensive.

It’s not just age. Years of experience can impact your costs too:

Licence Held Length Years Median Lowest Displayable Annual Premium On Quote Request*

*Confused.com data. July 2022 - June 2023. Comprehensive policies only.

Criminal convictions

If you’ve got a criminal conviction, your costs usually go up. This is because you’re seen as higher risk to insurers. If you’ve got an unspent criminal conviction, motoring-related or not, you should declare it to your insurer.

You might also need to declare spent convictions, but only if you’re asked.

Although you can’t control some of the factors that  influence your car insurance costs, it doesn’t mean you can’t reduce your bill. To keep your costs down, try the following:

  • Shop around: Compare car insurance quotes to find the best value cover - this is the best way to cut costs.
  • Don’t overestimate your mileage: The larger your estimated mileage, the more you might pay.
  • Increase your excess: By agreeing to pay more towards the cost of a claim you could reduce your car insurance costs. Just make sure your car insurance excess remains affordable.
  • Think about a black box policy. Younger and less experienced drivers could save a lot by agreeing to having a black box device fitted to their car that monitors your driving. The safer you're driving, the less you pay.

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