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How do car insurers drive up premiums for Londoners?
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A recent league table published by insurers shows that car owners in London pay some of the highest premiums in the country. People who own medium size cars, such as a Ford Focus and live in EC post codes, including the city, can expect to pay on average over ?700 a year for comprehensive car insurance. The average cost of insuring a car across London is over ?500, compared with the national average of ?369.
Other expensive areas of London to own a car include Hampstead and Golders Green where the average premium is over ?600. The reason for the high cost is because insurers pool drivers of relatively affluent areas with less affluent areas such as Tottenham, Edmonton, and Willesden. Surprisingly, drivers who get the best deal on their insurance live in the West End, close to Oxford Street where the average premium is just over ?260.
Although insurers are very accurate at pin pointing high risks among their customers, the diversity of London could mean that a family living in one area with a high crime rate could be no more than a few streets from a wealthy family in an area designated as a low risk area. If both families live under the same post code then the same ruling of producing a premium will apply to both families.
This is not the only criteria insurers will take into account when producing a premium. Other factors that will affect your premium include levels of traffic, proximity to nightlife and transport (bars, pubs, clubs, rail or tube). Areas that benefit from crime prevention such as CCTV can expect to pay less.
However, it is possible for customers to reduce the amount they can expect to pay by following a few simple tips:
- Group Rating: If your car is a Ferrari it will be fast and catch everyone's eye. For this reason it is considered high risk and will therefore cost more to insure.
- Modifications: If you like to modify your car with additional mechanical or bodywork features it will increase your premium.
- Car's Stationary Location: If you have a garage, use it. A garaged car, or one kept on a driveway will result in significantly lower premiums.
- Your no claims bonus: If you are claim free after your first year of driving you will earn a no claims discount, awarded to you as a safe driver. The more years you can accumulate the more reward you will receive, usually up to a 5 year maximum.
- Occupation: Workers who spend time on the road travelling from one location to another will be affected by higher premiums. This is not to say the quality of driving is worse, in fact it should be better. It is the fact that you spend more hours on the road than most other users, which makes it statistically more likely that you will be involved in an accident.
- Security: If you have an immobiliser, alarm, steering lock, and detachable stereo then use them. They will result in a significantly lower premium, particularly in areas that have higher crime rates such as cities.
- The Insurer: Some insurers may seem to offer a lower premium. It is vital that you check why this may be. For example some companies will load the excess payable in the event of a claim to ?250 or more. You may have a reduced total amount payable for items such as stereo equipment, or will not receive a courtesy car if your car is involved in an accident.
- Policy additions: If you have a number of people named on your policy, you are also covering their risk as well. To reduce your premium you can restrict the number of people on your policy.
Insurers continually monitor their assessment process when providing new premiums. Insurers are now considering providing house insurance based on the property's full post code, rather than just the first part of the post code. This will allow them to more accurately reflect a homeowner's risk but will not take into account the area in which the property is based. If the concept is successful then such assessment techniques may later be applied to car insurance.
| London postal District | Average Premium | | EC1, 2, 3, 4, NW2 | £732 | | NW10, N17, W1P, N18, NW4, NW3, NW11,
E7, N15, E1, N16, SW2, WC1, WC2, N4, E16, E8, E9, SE17, N2, SE15, N19,
E3, E9, SE17, N2, SE15, N19, E3, E2, SE5, E13, W10, NW5, SE8, E5, SE14,
E14, N7, NW1, N8, N5, E10, SW4, NW6, W9, SE11, SE22, SE4, SW8, SE23, W2, NW9, SE6,
SE18, SE3, SW5, SE13, W12, SE28, SW11, W3, W5, SE12, SE2, SW18, SE9, W4 | £684 | | W12 | £262 | | SW20 | £358 | | SW14 | £384 | | SW13 | £385 | | SW6, SW18, E4, W4, SW19, SW15 | £358 | | | | | Nationwide | Average Premium | | London | £522 | | Midlands | £358 | | South East | £350 | | North West | £332 | | Scotland | £323 | | Wales | £321 | | South West | £304 |
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