An insurance premium is the amount you pay for your insurance. It sounds technical, but just think of it as the price or cost of an insurance policy.
It can be confusing for some as premium is often used to describe something as good quality. However, for an insurance premium this is not the case. In insurance, premium just means the price you pay, and has nothing to do with quality.
What’s a car insurance premium?
In car insurance, a premium simply means the amount you pay to an insurer for your car insurance.
When you sign up with a car insurance company, the price of your policy is known as your premium.
You can usually pay your premium all at once (annually) or spread the cost with monthly payments.
Either way, the premium is the cost of having an insurance policy in place. It’s calculated based on the level of cover you choose and the risk an insurer believes it’s taking on by insuring you.
If you’re looking to save on your car insurance, get a free quote today.
How do I pay for my car insurance premium?
You can either pay your car insurance premium all at once when you take out your policy, or choose to pay in monthly instalments.
If you pay monthly, your insurer will usually either take car details for regular payments or set up a direct debit.
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)
- The 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)
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. Sometimes, by choosing to pay a higher excess you can lower your premium.
Read our full guide to car insurance excess.
I’ve moved to the UK, why is my insurance 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.
That’s where Marshmallow comes in. We accept proof of claim-free history from any country so you can get the fairest and most affordable price possible.
Get a quote today to see how much we could save you on your car insurance.
