How Premiums are Calculated

Factors taken into account in costing your insurance include who will drive, the type of car, where it is kept, the uses to which it is put, and the type of cover required.

When buying motor insurance you must give the insurer full information.

Drivers
The policy may only cover driving by yourself or specified people, or it may allow driving by any qualified person with your permission, possibly over a certain age limit. Your insurers will want to know about anyone who is likely to drive - particularly their age, experience, claims and driving record and occupation.

Your Car
Family motor cars with moderate repair costs are usually cheaper to insure than large or powerful motor cars which can be expensive to repair.

Each model is given an insurance group rating. This system is described later in this Information Sheet.

Older motor cars often attract discounts from comprehensive insurance premiums.

District
Insurance claims are more frequent in urban areas so motorists in cities usually pay more for their insurance than those who live in the country. The place where the car is kept is a rating factor, so tell your insurers if the car is not kept at your home address.

Use
Your policy and certificate set out the uses for which your car is insured. For example, if you or any authorised driver want to use your car in connection with work, make sure that your policy covers this.

Driving Other motor cars
Most policies cover the policyholder in person while driving a car which belongs to someone else.

However, cover will be limited to third party only, even if you have a comprehensive policy. Accidental damage to the borrowed car will not be covered by your insurance.

Make sure you have the car owner's permission to drive it and that they have arranged comprehensive insurance to cover you as a driver under their policy. If they have done this, then accidental damage claims to their car, while you are driving, will be met by their policy.

Similarly, before letting someone else drive your car make sure your policy does not have a restriction on who may drive it.

Drinking and Driving
Drink driving convictions are taken very seriously by insurers. Convicted drivers returning to the roads may face difficulty in obtaining insurance and will certainly have to pay premium increases of at least 100%. The level of cover may be reduced - for example from comprehensive down to third party fire and theft. These higher premiums and cover restrictions can well last for a number of years.

Changing Your Car
You must tell your insurers if you change your car. A premium adjustment may be necessary and you will probably need a new certificate.

No Claims Discount
Policyholders with a claim free (not blame free) record normally qualify for a premium discount. Scales do vary but usually range from 30% for one claim free year up to 60% or more after four or five years.

"Protected Discount" policies are often available for motorists with maximum discount. For an extra premium, a number of claims are allowed without affecting the discount. Typically two claims are allowed in a three to five year period.

Your insurance premium or your excess may be affected however, even though your discount is protected, if you have a poor claims record or have driving convictions.

Motoring Abroad
All UK motor policies provide the minimum cover required by law in other European Union countries or the minimum cover required by UK law if that is greater. This cover does not automatically include theft or damage to your car and it may not completely cover your liability to other people. If you do not already have full cover for travel in Europe and you tell your insurers in advance, they can extend your UK level of cover to most holiday destinations. If you are unsure check with your insurer.

Your insurers can also supply a Green Card. This is recognised internationally as evidence that you have insurance which meets local law.

Look After Your Car
All insurance policies require you to make sure your car is in a roadworthy condition. If you don't, you may find that your claim will not be paid.

From time to time vehicles may be subject to a manufacturer's recall to address a possible safety concern. You should check with your local dealer or vehicle manufacturer to see if your vehicle may be affected.

Tell Your Insurer
You must tell your insurer of any changes in the details given on your proposal form such as address, occupation, type of car and motoring convictions including fixed penalties.

Remember - not only is it an offence under the Road Traffic Act to make a false statement or withhold information for the purposes of obtaining a certificate of motor insurance, but it may also invalidate your policy.