How your postcode may affect car insurance costs

Your postcode can reveal a lot of information about one of the main areas you’ll be driving and where your car will be for most 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.

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.

Car insurance providers use information on both claim numbers and crime rates to rank UK postcodes according to risk. This risk classification is then one element that determines how much you pay for your car insurance.

Postcode ratings for car insurance in the 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. These go from A ranked postcodes, which are the

lowest ranked postcodes, to F ranked postcodes that are considered high risk. Some insurers will use these to provide a cost for your insurance.

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, this can also be applied to cars. However, this would be stated in your policy if applicable to your vehicle.

High risk vs low risk postcodes

High risk postcodes

Generally, postcodes in urban and inner-city areas are considered a greater risk for insurance providers. This is because they are more densely populated and have heavier traffic flows, increasing the likelihood of an accident.

Crime rates also tend to be higher in urban areas. Insurers will take this into account when calculating the cost of your car insurance.

Low risk postcodes

Rural areas tend to be seen as lower risk. They are less heavily populated with typically lighter traffic levels, which means there is a reduced risk of accidents. Crime rates also tend to be lower than in urban areas.

Why is my car insurance so high?

If you are a safe driver with a decent no claims history and your car insurance is higher than you would expect, your postcode may be a factor. If you live in an area that is more densely populated or has a high crime rate, you may pay more for your insurance.

There are also many other reasons why your car insurance may be high, including:

• Your age: If you’re a new or younger driver (under 25), your car insurance premiums will likely be higher as insurers view you as more of a risk.
  
  
• Driving history: If you’ve been involved in an accident before, car insurance providers may view you as riskier to insure now.
  
  
• Your job: Some jobs push up the cost of your car insurance. For example, you may pay more if your job requires a lot of travel.
  
  
• Your car: If your car is in a higher car insurance group, this can push up the cost of your car insurance premiums.
  
  
• Where you park your car: If you park your car on the road, rather than on a drive or in a secure garage, you may pay more for car insurance.

Will changing my address affect my car insurance?

Changing your address could impact how much you pay for car insurance. For example, if you move to a lower risk area, your premium may go down. Or, if you move to a higher risk area, it may go up.

What happens if my car insurance address is different to my home address?

If you’re a student splitting your time between home and university, or if you work and live somewhere else during the week but come home on weekends, it can be complicated to know which address to use for your car insurance.

If you’re unsure which address you should be using, contact your insurance provider for guidance.

How can I lower my car insurance?

If you think your postcode is playing a part in your expensive car insurance premiums, there are a number of things you can do to help offset this.

For example, you could park your vehicle somewhere safe, such as in a secure parking garage or a locked garage at home.

You may also try:

• Adding a black box to your vehicle
• Adding an experienced driver to your policy
• Paying a higher excess on your policy

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