We’re here to tell you all you need to know about car insurance premiums. That includes what a premium is, how the price of a premium is calculated, and why UK newcomers often get charged too much for theirs.
What is a premium in car insurance?
When you sign up with a car insurance company, the price of your policy is known as your premium.
How do I pay for my premium?
You can either pay for a year's coverage all at once or choose to pay in monthly instalments. Here at Marshmallow, we let our customers choose which payment plan works best for them.
If you pay monthly, the processing fees will not be included in your premium price. But they will be added to your total price. Your first instalment will also be higher, with 11 smaller instalments spread throughout the year.
How do car insurance companies set my premium price?
The price of your premium is totally unique to you. That's because insurers look at the information you give to see how likely you are to make a claim.
Your premium depends on lots of factors, including:
- the level of cover you choose (Third-party Only or Fully Comprehensive)
- your driving experience
- your claim-free history
- how often you use your car (your annual mileage)
- what car you drive (so they can work out how expensive it is to repair etc.)
- where you live
- your past motoring convictions (like speeding tickets)
You can find out more about how insurance companies set their prices here.
I’ve moved to the UK, why is my premium so expensive?
If you’re a UK newcomer, you might have found that car insurers are quoting you very expensive premium prices. That’s because most UK insurers won’t recognise your driving history or your claim-free driving record from another country.
Lots of companies price UK newcomers as though they’re brand-new drivers with little to no experience. That means you miss out on experience-based discounts. In fact, you could end up paying up to 45% more for your policy.
That’s where Marshmallow comes in. We accept your claim-free history from any country so you can get the fairest and most affordable price possible.
Moved to the UK? See how much we could save you on your car insurance. Get a quote now.
Is car insurance excess the same as a premium?
Your excess is the amount you agree to pay towards any claim you make. You only have to pay your excess if you're involved in an accident and make a claim.
A premium, on the other hand, is the amount you pay for your car insurance policy. You start paying your premium once you sign up.
Sometimes, by choosing to pay a higher excess in the event of a claim you can lower the overall cost of your premium.
You can read more about your car insurance excess and how it affects the price of your premium here.
Got any more questions about UK car insurance? Head to our blog for lots of useful guides, or get clued up over on our help page 🤓