Why is my car insurance so high with no accidents?
The cost of car insurance can be eye-watering, especially if youre new to the roads. Yet were led to believe that if we drive carefully and dont make any claims, the cost of our premium should come down. Before we tackle the main question, its important to establish that the cost of car insurance differs depending on the type of cover. There are three main types of cover:  Third-party cover is typically the cheapest. It covers the costs of repairing damage to another vehicle involved in an accident. cover is typically the cheapest. It covers the costs of repairing damage to another vehicle involved in an accident. Third-party fire and theft cover does the same, but it also covers your car if its stolen or damaged by fire, so is usually the second cheapest option. cover does the same, but it also covers your car if its stolen or damaged by fire, so is usually the second cheapest option. Comprehensive insurance covers much more, including any damage to your own car. As a result, its usually the most expensive. Besides the type of cover you choose, the cost of your car insurance can also vary depending on a number of other factors. These can include your age, where you live, how much your car is worth, where you park your car at night and whether you have any driving convictions. There are other factors to consider too. For the full list, see our article on how to get cheaper car insurance. Now weve discussed the main variables that can impact the cost of car insurance, lets explore the main question. Here are four reasons why you could be quoted a high price. 1. The loyalty penalty  While insurers love careful drivers who dont make costly claims, theyre businesses too, which is why some will attempt to boost profits by any means necessary. This often means quoting existing policyholders more than new customers, hoping that theyll renew without doing any research. Customer apathy  also known as the loyalty penalty  is big business in the personal finance world,  Try to avoid just automatically renewing your policy. Take the time to compare quotes from a number of providers. The easiest way to do this is by using the services of a price comparison website such as MoneySuperMarket. If you can, use more than one comparison site because different sites compare different insurers. 2. Changing variables  Weve already touched on the factors that can impact the cost of your car insurance policy. If any of these have changed, then its possible that your insurer sees you as higher risk. So, if youve bought a more expensive car, made modifications to it or even moved house, your premium may increase. While some variables are within your control, others arent. For example, you cant control your age (elderly drivers may face higher premiums) or the crime rate in your neighbourhood. Both of these variables can have a big impact on your quote. 3. Wider changes in the market  External factors may also influence the price of car insurance, which can lead to increased premiums. For example, back in 2012, a European Court ruling prevented insurers from discriminating by gender. In the past, insurers typically charged men higher premiums as they were perceived as higher risk. As a result of this change, womens renewal premiums increased massively across the board, even for those who shopped around. 4. A no claims bonus not being as valuable as you think  Insurers typically offer no claims discounts to reward careful drivers with years of accident-free driving under their belt. Some policies also offer to protect your no claims discount. This means its possible to keep on adding years to your discount, even if you do have an accident. Because of this, insurers know that those with several years of no claims may have made a recent claim on their policy. As a result, almost all insurers will now ask whether you made any claims in the past, as well as asking for the number of years associated with your no claims discount. So while having a big no claims figure is certainly a positive, dont think it will automatically mean youll get a cheaper quote. From 1 January 2022, insurers will be banned from offering cheaper quotes to new customers over existing policyholders. This is good news for those who dont compare providers as it provides protection from the loyalty penalty. However, some consumer groups have expressed concern that the change will lead to higher insurance premiums across the board. This is due to a perception that insurers will try to claw back some of their profits previously made from unsuspecting loyal customers. Whatever your views on the new policy, from 2022 onwards, it will still make sense to shop around for car insurance to ensure you get the cheapest quote. 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