insurance premiums cost

If you’ve been shopping around for insurance options lately, you may be wondering how car insurance premiums are calculated. Some companies look at different factors and include different things. In general, there are a few standards that affect how your premium is calculated.

Insurance advisors and consultants calculate an insurance quote specifically for you based on your individual profile. An insurance premium quote should be given to you based on your specific statistics. Let’s have a look at how your car insurance is calculated.

Insurance claim history

Your insurance claim history will be one of the top factors that insurers look at when calculating your insurance. If you’ve had car insurance in the past and have a history of taking out an insurance claim for every scratch or ding in your car, then insurance providers might be quite wary of you.

In the future, remember to use insurance claims wisely and only, when necessary, as it could affect your monthly premium cost.

how insurance is calculated

Your type of car

The type of car you drive also affects the calculation of your insurance premium. Information such as the car make, model, year, and mileage all affect your insurance premium. They also take into consideration the value of the car and what it would cost to replace.


Since ‘risk’ plays a very big part in how premiums are calculated, your location is accounted for as part of the insurance calculation process.

If you live in a neighbourhood that is a crime hot spot, you are a higher-risk client. If you live in a very safe neighbourhood with your car locked in a garage or behind a gate, you are lower risk, and it will contribute to a lower premium.


Most of us don’t like to acknowledge or discuss our age. But in this instance, your age could be your advantage. The older you are, the more experience you have with driving. This makes you more trustworthy on the roads and less of a risk.

Pensioners can get good premium deals as they drive the least. A young person in their 20s will be paying higher premiums which are calculated by their weekly or monthly commute and general driving habits as they are more likely to get into an accident. A pensioner who only goes out once or twice a week is less likely to get into an accident.

Vehicle usage

As we briefly touched on above, how often you drive also affects the premium calculation. If you are using your car for your daily work commute, errands, long-distance driving, etc. then you are more likely to get into an accident. Therefore, you’ll be paying less if you don’t drive much compared to someone who uses their vehicle daily.

Also make sure you mention if you are using your vehicle for work purposes, such as deliveries, as the insurer would recommend commercial car insurance instead.

car insurance premium

Driving record

Your driving record says a lot about you. If you’ve received speeding tickets and parking tickets in the past, or have been in accidents, insurers will use this information to determine how much of a risk you pose on the roads. They also look at how many drivers are using your car, how long you and they have been licensed, and their driving records.

Generally speaking, the cleaner your record, the lower your premiums will be.


There are quite a few factors that determine how insurance premiums are calculated. Over the years, these determining factors will change. It’s a good idea to update your details and request new quotes every few years.

Car insurance premiums are calculated with factors such as your age, car model, insurance claim history, location, car usage, and driving record.

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