Three common car insurance questions answered by Marshmallow

Marshmallow is an award-winning car insurer making insurance cheaper for people who’ve moved to the UK. We asked Marshmallow’s Pricing Trading Manager, Ben Matthew, to take over our blog and answer some common car insurance questions.

How do car insurance companies work out their prices?

Put simply, car insurance is all about risk. The more risky a person seems to be on the road, the more their car insurance will cost. Insurance companies look at lots of different data points to work out how risky a driver might be.

What factors can affect the price of a car insurance policy?

Different insurance companies look at different things when working out your policy price. But the main factors impacting the cost of your car insurance are:

● Where you live: If you live in an area with a high crime rate or lots of traffic, or if it’s a place where a lot of car accidents tend to happen, you’ll often be charged more.

● Your driving experience: If you’ve been driving for a long time, your price is usually cheaper than a new driver’s as you’re seen as more experienced.

● Your claims-free driving history: The more years in a row you’ve been driving without making an insurance claim, the bigger your discount. In the UK, we call it a No Claims Discount but lots of countries have similar reward schemes with different names.

How can people lower the price of their car insurance premiums?

● Choose the right car: We all dream about owning a fast and powerful car, but you’re better off driving something smaller and more sensible (think the humble Renault Clio). It costs less to insure these sorts of cars as they’re safer to drive and less likely to be stolen.

● Get a driving tracker: Sometimes, the best way to drive down the price of your insurance is to choose a telematics or 'black box' option. These monitor your driving using GPS and make you a less risky prospect for insurers.

● Pick and choose your policy features: Don’t pay for extras you don’t need. Always make sure you understand what you’re buying, and what kind of protection it gives you.

● Top up your excess: Sometimes, you'll get the option to top up the excess that’s set by the insurer (Compulsory Excess) with a voluntary amount that you agree to pay on top if you make a claim (Voluntary Excess). By agreeing to pay more Voluntary Excess, you can bring down the overall cost of your premium. Just make sure that you can afford to pay the Total Excess (which is Compulsory + Voluntary) if you make a claim.

● Choose public transport: Do you drive a lot? That’ll make your premium more expensive. It’s not always easy but (if you can) travel using public transport to save your mileage. Just make sure you’re always honest about your average mileage when getting your insurance.

Thanks to Marshmallow for taking over our blog to talk about all things car insurance. If there’s a topic you’re interested in finding out more about, let us know and we’ll try to cover them in our upcoming blogs.