Postcodes can hugely impact car insurance premiums. Depending on where you live, it could cost you hundreds, even thousands of pounds. Check out why car insurance for young drivers can differ so much based on your address.
Most of your driving occurs in or close to your postcode
As a driver and car owner, insurance providers look at a lot of information about your postcode to determine your risk. The following statistics demonstrate why:
- More than 60% of journeys are less than five miles from home.
- The average trips in the UK are under 10 miles.
- One in three car accidents occurs less than three miles from home.
What things can make your postcode high risk for car insurance?
A while back, population density and the number of road accidents in an area were the top issues for insurance providers assessing risk factors.
These days, car insurance companies’ biggest worries are high crime and fraud rates, which most impact premiums. Considering these risks, many insurers may decide not to offer a quote for areas of very high crime.
What are the top 7 factors of a postcode that affect car insurance quotes?
Crime rates
High crime areas include vehicle theft, breaking into vehicles and vandalism.
“Crash for cash”
Staged collisions are fraudulent insurance claims where vehicles are damaged to give the impression a real accident has happened.
Induced collisions where the fraudster deliberately engineers a crash with an innocent driver.
Fraudulent claims
Personal injury claims – faking an injury following a genuine vehicle accident.
Submitting a fictional claim for an accident that never took place
Uninsured drivers
Uninsured drivers increase your postcode risk and can cost you if you get involved in an accident.
Population and road accident rates
High-populated areas with more cars, cyclists and pedestrians make accidents more likely. If you live in a town or city, expect higher car insurance premiums.
Road systems
Road layouts with complex junctions, roundabouts, cycle lanes and poorly maintained roads will likely have higher accident rates.
Parking
High street parking levels in your Area increase the risk of car crime. (If you park overnight in a more secure location, you’ll likely lower your premium).
Where do you park your car overnight?
In addition to your postcode, insurers will price your insurance on where you keep your car overnight.
If you park your car in a garage or on a drive, you likely get a cheaper policy than parking in the street.
If you move house from a lower-risk to a greater-risk postcode, you could still save money on your policy if you previously kept your vehicle on the road and now keep it in a garage.
Car insurance postcode rankings explained
To calculate your address risk level, insurers put your postcode into one of six groups: A, B, C, D, E or F.
A ranks as the lowest risk level, and F is the highest level of risk.
Many insurers use the above rankings to price your insurance. Other insurers might go from A to W. Unfortunately, it varies, and no one system suits all.
Some of the riskier postcodes can receive a “Refer” rating. You may have to follow special conditions, such as keeping your car in a locked garage.
How do car insurance rankings work within a postcode?
Insurers typically keep postcode rankings at the District level.
For example, Norwich NR has 35 postcode districts, ranging from NR1 to NR35.
Insurers typically split these districts into the following risk levels:
Risk A – NR9 to 29 & NR 32 to 35
Risk B – NR3 to 4 & NR6 to 8 & NR30 to 31
Risk C – NR1 to 2
Risk D – NR5
You’ll note Norwich does not currently have areas of the highest risk.
What other things can affect car insurance premiums?
Your postcode isn’t the only thing that can affect the cost of your car insurance. Your premium can also be influenced by other factors, with these having the most impact:
- Age
- Job title
- Make and model of vehicle
- Mileage
- Overnight parking
- Driving history
- Adding a named driver
- Voluntary excess
- Modifications to your car
Will changing my address affect my car insurance?
Yes, changing your address could impact your car insurance price. Moving house to a ‘higher risk’ postcode will likely increase your premium, but it could go down if you move to the sticks.
If you change addresses, you must tell your insurer. Failure to do so could invalidate your policy.
It’s also worth considering the impact on both car and home insurance premiums when moving to a new postcode. Obtaining insurance quotes for the new location is crucial to help keep you on budget.
As a student, which address should you give for car insurance?
Do dual postcodes affect car insurance?
For example, if you are a full-time student at university living in student accommodation but returning home to your parents between terms which address do you use for your student car insurance?
Insurance providers expect you to use the location your vehicle is for the majority of the time. Don’t use your parents’ home address or any other misleading address to save money on your car insurance premium unless that is where the car is mainly kept.
How does where you live impact car insurance?
Do you live in a town or city centre? Perhaps you have a place in the burbs or an address in the sticks?
Town or city centre postcodes
Most car insurers view a town or city postcode with a high population density and traffic volume as the highest risk.
More vehicles on the road equate to more accidents, which have a greater chance of damaging you and your car. Inner cities also have a higher crime rate.
The burbs
The burbs with more space and fewer vehicles on the roads are usually at a lower risk than town centres but can vary greatly.
Some areas might have a low crime rate, and housing with garages, alarm systems, CCTV, and a neighbourhood watch might be considered lower risk.
But, other areas have high crime rates and can soon become a higher risk for insurers.
Countryside postcodes
Postcodes out in the sticks (rural areas) are often the cheapest for vehicle insurance. They have low traffic and usually very low car crime.
But, a low-risk postcode in the countryside miles from city centres could cancel out any savings on motor insurance because you have to travel to work and have a higher annual mileage.