Drivers across the country are having to put up with an insurance postcode lottery that means some people will be paying up to four times as much for car insurance premiums depending on where they live.
The study carried out by This is Money highlighted the sensitivity of insurers to divulging details of how they set individual premiums, justifying their lack of transparency on the information being commercially sensitive.
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We do know that other factors such as a driver’s history, their age and what car they have all contribute to how much the overall premium will be.
But, your address is also a key component of how insurers view you as a potential risk – taking onboard the likelihood of theft, flood damage and frequency of crashes in your area.
You won’t just find high premiums being quoted if you happen to live in a ‘high-risk’ area, because insurers will often bump up excesses, too, which means you’ll have to pay out a lot more in the first instance should you have to make a claim.
This is Money brought together a range of vehicles, keeping the criteria the same but using different postcodes.
Examples ranged from Newham in East London,which has the UK’s highest premiums, to the village of Hodnet in rural Shropshire.
The ultra posh West London region of Chelsea was also included due to its high proportion of expensive vehicles.
It won’t come as a shock to discover that drivers in the East London postcode have the priciest premiums – by up to 3.94 per cent.
Surprisingly though, individual excesses aren’t always higher in the so-called riskier areas
One example featured a Ford Focus that incurred an excess of £150 in East London, but rose to £350 in West London and Shropshire.
The number of insurers prepared to give you a quote can also be a reason for varying insurance premium prices.
If you’re able to receive more quotes then you should have a better chance of gaining a lower overall price – as insurers will be competing against each other for your business.
However, the number of insurers that were willing to provide a quote drastically reduced if the area was viewed as too risky.
For example, insuring a Range Rover in Newham meant just four insurers were available, while if you lived in Shropshire you’d have a choice of up to 16 providers.
A spokesperson for the Association of British Insurers trade body said: ‘Your postcode may impact on the cost of your motor insurance, for example reflecting the vehicle crime rate where you live.
‘But it will be one of many factors that an insurer will consider – such as your age, claims record and type of vehicle – when assessing your risk.
‘You may not be able to do anything about where you live, but motor Insurance is competitive, so you can shop around to get the best motor insurance deal for your needs.’
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.