How Are New Car Insurance Premiums Determined?

Car insurance companies in UK and the rest of the world use different methods to determine amount of premiums payable on a new policy. To calculate premiums payable, insures will employ sophisticated computer software programs based on car owners personal and demographic data.

Car Insurance

Driving history

A car owner’s driving history will have a lot to do with determination of insurance premiums payable for the coverage. Most auto insurers will be highly interested with traffic violations and number of careless driving tickets given to the driver especially in the past five years. Otherwise referred to as the motor vehicle report, your driving history should be good if at all you are interested in finding reduced premiums for the policy. Any ticket and traffic violations will impact negatively on your search for better and more competitive premiums.


Auto insurance discounts applied on the policy have the effects of reducing the amount of premiums that a new policy holder will pay. Insurance companies in UK will provide discounted insurance policies as a way of luring buyers to buy coverage plans from them. You will get discounted quotes if your car has certain specifics such as air bags, anti-lock brakes and other anti theft devices such as alarms and a well secured garage. It is also possible to land discounted deals if you are a member of certain approved groups and associations.


Insurance companies assign a new car owner some eligibility points depending on the nature of their driving history or motor vehicle history. Even if you have been apprehended for traffic violations in the past, the severity of such violations will obviously vary from one driver to another which will affect determination of insurance premiums. Ticket points drop after a given period of time but road violations are likely to remain on your motor vehicle report for an even longer period of time. If the eligibility points do not speak well of you especially due to having so many road violations, you might be surprised that not so many insurers will be willing to cover your car.

Rate changes

Determination of premiums for new auto insurance policies is done using a given base rate which is applicable to every other vehicle and driver on a certain policy. The determination of base rate is done by application of various statistical and mathematical tools which gives the value of the base rate. No insurance company is allowed to change rates unless it gets authority from the National insurance regulation department. If the rate changes to your advantage, then you are assured of paying reduced premiums on the cover. On the other hand, if rate changes do not favor you, you should expect to make even higher premium payments on the policy.

Get affordable premiums today

Even with so many factors playing a part in determination of new car insurance premiums, it is vital to ensure that you pay the most affordable premiums in the market. This is only possible if you take time to shop and compare quotes from different auto insurers in UK.