Does Car Insurance Differ by Postcode and Why?

Four different coloured cars sat on the driveway of their separate detached houses
Written by: Lucy Robinson Motor Insurance Manager, Asda Money 09 Feb 2021

Owning a car comes with a number of things to consider, like road tax and fuel costs, but one of the things which can vary quite a bit is car insurance. There are a lot of factors which can be included when calculating your car insurance cost, but one that people might not consider is your address.

Here’s some of the key information to explain why your postcode affects your car insurance and what you can do to help to offset some of the costs.

How does my postcode affect my car insurance?

One of the things an insurer looks at when calculating your car insurance is your postcode, as it can reveal a lot of information about one of the main areas you will be driving and where your car will be for the majority of the time.

Postcodes with a dense population are usually more likely to make a higher frequency of claims, as there are more drivers in the area.

This is also reflected in traffic density, which looks at the number of cars on the road in your postcode. The more vehicles on the road, the higher the likelihood of accidents and claims.

Roads themselves can also play a role in how your postcode affects your car insurance, as insurers will be aware of high-risk road systems nearby, such as local junctions, roundabouts and cycle lanes which can be indicators of a higher claim risk.

Finally, crime rates within your postcode will play a role in the price of car insurance for your vehicle, as high rates of car theft and vandalism will add risk to your policy. This is one of the main reasons why urban postcodes in cities are seen as higher risk than rural areas of the country.

Postcode ratings for car insurance UK

Every postcode in the UK will fall into one of six groups when it comes to car insurance, based on the level of risk they pose from claims seen in each area, and some insurers will use these to provide a cost for your insurance. These go from A ranked postcodes, which are the lowest ranked postcodes, to F ranked postcodes that are considered high risk.

It’s worth noting that if you’re a motorcyclist, any motorcycle in a D, E or F ranked postcode must be kept in a locked garage or secured building at your address, and in some areas can also be applied to cars. However, this would be stated by your policy if applicable to your vehicle.

Why is my car insurance in the so high in the UK?

If you think that your car insurance is higher than it should be, this could be because of the postcode where your car is kept the majority of the time. The postcode of the policy holder’s address is what is used to determine the level of risk your vehicle is at through external factors not linked to you as a driver.

So, it’s possible that even as a safe driver with a good no claims bonus that your car insurance is slightly higher in order to ensure your vehicle is covered against external risk factors, such as higher risk of theft or likelihood of getting into an accident.

How can I get cheaper car insurance in the UK?

If you think your postcode is playing a part in causing your car insurance premiums to be higher than expected, then there are a number of things you can do which can help offset this.

Parking your car off of the street in a dedicated parking spot can potentially help to slightly lower your car insurance premiums in high risk areas. Car insurance providers view this in a positive light as it means your car is less exposed to accidental damage from nearby traffic, as well as being less appealing to thieves.

Alternatively, if you can park your vehicle somewhere safe like a secure parking garage or locked garage at your home, this can also help your car be seen as lower risk.

There are a number of additional things which you can do to help lower your insurance premiums and get cheaper car insurance which you can find here, including adding a black box to your vehicle, adding an experienced driver to your policy, and paying a higher excess on your policy.

One of the best ways to ensure you’re getting the best deal is to do a tailored car insurance comparison, showing you all the available policies out there, so you can pick the one which suits it best. Why not get a quote and see how much you could be saving?

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