Do You Live in a Car Insurance Blackspot?

Take two drivers, Scott and Dave, both 24 years old with identical driving records. They work in the same occupation, both drive about 10,000 miles a year and have passed advanced driving courses. Neither is married, they live alone and drive the exact same make, model and year of car. They even insure their car's through the same broker with the same options. Whilst both drivers appear to be an insurers dream, Scott pays £315 annually to insure his vehicle, while Dave only parts with £233 for his.

What is Dave doing to save £87 a year on his motor insurance? He’s found himself a flat in Leeds, that’s all. Scott, on the other hand, lives in East London where car insurance rates average the highest in the UK. Scott’s unwittingly living in one of the UK’s major car insurance blackspots.

How does location affect your premiums?

All insurance is based upon risk and insurers take many things into account when setting your premiums. Two of these factors are the relative risk of parking your car at your residence and the number of claims made by policyholders who live in your area. These and other factors combine to determine the risk of loss or damage to a car and therefore impact on the level of premium you’ll pay. Research carried out by Moneysupermarket in 2007 backs this up revealing that premiums are highest in East London and lowest in Dundee.

Whilst more rural areas typically carry lower premium rates for motor insurance than towns and cities, it’s not a hard and fast rule. Even if you live in a country town with low levels of car crime, for instance, your premiums won’t necessarily reflect that if the rate and value of accident settlements insurers have to pay increases.

So where are you likely to pay the most to insure your car in the UK? Here’s a list based on research from Moneysupermarket in 2007 comparing quotes to insure a 2001 Ford Focus (parked on a drive) for a 25-45 year old with 5+ years NCD, no convictions and a £100-£250 voluntary excess.

If you live in an area where risks are statistically lower, then you’ll pay lower premiums. How much lower? Here’s a list of the cheapest towns and cities for car insurance in the UK based on the same quote profile above.

As long as insurers continue to load premiums on “high-risk” urban areas, car insurance costs in areas like East London and Manchester will keep rising, while areas such as Dundee and Aberdeen will stay at the bottom of premium league tables.

Take control of your premiums

No matter where you live, shopping around is still the best way to take back some control over your car insurance premiums. As many insurers weight certain risk factors differently, which can also change from year to year, some strategic shopping really can get you a better deal at renewal time.

A good way to compare your current policy with as much of the market as possible is to use at least two price comparison sites that also allow you to compare policy features. However, make sure you are comparing like with like and bear in mind that some sites make assumptions which could affect the accuracy of the quotes returned. Tesco Compare and Gocompare guarantee the accuracy of their quotes and also offer varying degrees of policy comparison as part of their quotation process, although you should confirm the full cover details before completing any purchase. A relatively new entrant to the financial comparison market is Insurance.co.uk which claims to compare price, policy benefits and service in as little as four screens.

An alternative is to take your shortlist of insurers from the comparison sites and head over to find.co.uk where you can compare detailed policy information provided by Defaqto, the independent research company.