Does your post-code affect the cost of car insurance?
Many different factors are involved in setting the cost of car insurance, and one of them is your postcode. Insurance premiums can vary significantly, even in neighbouring postcodes. This is why it can often come as a surprise that adjacent streets might be rated differently.
Read on to find out why where you live has such an impact, and how your own postcode is rated.
Why postcodes are a risk factor
Insurers need to assess the risk of you making a claim so they can set a premium. That’s why you’re asked so many questions when you apply for insurance, and why they analyse all sorts of statistics to weigh up every set of circumstances.
Postcodes are a risk factor because there are big differences in the number, frequency and extent of claims made around the UK. Postcode data can tell insurers about:
- Population density – denser populations are inclined to a higher frequency of claims
- Traffic density – more vehicles on the road usually means more accidents and claims
- Crime rates – car theft and vandalism tend to be greater in urban and city areas
- Personal injury claims – some areas show higher claim rates for personal injury
- High risk road systems – local junctions, roundabouts and cycle lanes can increase the risk of a claim
Looking at that list, it’s easy to see why postcodes are often rated as a higher risk in urban and city areas than rural areas.
The 6 levels of postcode rating
Insurers group postcodes into one of six levels of risk, from A to F, with A being the lowest risk and F being the highest.
Which parts of the UK have the lowest and highest postcode ratings for car insurance?
According to data from Compare the Market between January and April 2019, UK regions with the cheapest average premiums include the South West, Scotland, Wales and the South East.
The most expensive regions were Greater London, the North West, West Midlands and Yorkshire and The Humber.
As we mentioned earlier though, premiums can vary widely, even in neighbouring postcodes, because of all the other risk factors involved. Therefore, your own personal circumstances will also affect the final cost of your car insurance, so it’s difficult to generalise.
How often do insurers update postcode risk assessments?
Insurers understand that the profile of a neighbourhood can change over time. Because of this, they refresh their databases regularly to ensure that premiums are an up-to-date reflection of a postcode’s actual risk. This keeps their quotes competitive in areas that are lower risk, and helps them budget for greater outlay in higher risk areas with more (or more expensive) claims.
How to cut the cost of insurance
You might not live in a cheap postcode for car insurance, but you don’t have to move house to reduce the cost! Some sensible tips include:
- If possible, park off the road or in a garage overnight
- Lower your average annual mileage
- Increase your voluntary excess
- Buy a car in a lower insurance group
- Make sure your job title is accurate
- Don’t insure your car for a higher class of use if you don’t need to
Taken in isolation, knowing if your postcode is a low or high risk isn’t very helpful. It won’t give you much idea how much your car insurance will cost. Take away the guesswork and let Complete Cover Group find affordable cover for you.