Car insurance postcode lottery: We reveal how insurers charge up to FOUR TIMES more for car cover in east London, compared to rural Shropshire
- Insurers can quadruple the cost of car coverage just based on your zip code
- These companies may also increase deductibles, which increases the cost of the claim
- Even shopping around may not help, as many insurers ignore some zip codes.
Drivers face an insurance postcode lottery that can see them pay up to four times as much for car insurance premiums depending on where they live, This is Money analysis has revealed .
The problem doesn’t stop at premiums either, because if you’re in a ‘risky’ area, many insurers also charge high unavoidable deductibles – the money you have to pay before a claim is paid.
A motorist’s location, along with other factors such as driving history and type of vehicle, all affect how much drivers pay.
Insurers are keeping tabs on exactly how they set their premiums, arguing it is commercially sensitive information.
But it is known that when it comes to where you live, insurers consider factors such as the risk of theft and the statistical probability of floods and accidents in order to set premiums.
Don’t count on it: cheap premiums and the choice of insurer may depend on where you live
So to give an idea of how where you live affects what you pay for car insurance, This is Money compared quotes for a range of vehicles, keeping everything the same but using multiple postcodes. different.
These ranged from Newham in east London, the place with the highest premiums in the UK, to the rural village of Hodnet in Shropshire – voted the UK’s poshest.
We have also included the expensive area of Chelsea in West London due to its high proportion of expensive vehicles.
Unsurprisingly, drivers in the east London postcode pay the highest premiums – up to 3.94%, in the case of the Land Rover Discovery, where insurance costs range from £759.71 to £2,999.73.
But it’s not just premiums that increase depending on where you live, your mandatory deductible can also increase.
This is something that is often overlooked by consumers buying car insurance, which is often done based on premium price.
| Car | east london | West London | Rural Shropshire | |
|---|---|---|---|---|
| Land Rover Discovery | £2,993.74 | £2,553.67 | £759.71 | |
| Mercedes E-Class | €2,136.78 | £2,098.99 | £685.63 | |
| BMW 3 Series | £1,395.95 | £1,072.03 | £646.41 | |
| Honda Jazz | €1,144.33 | £893.46 | £556.84 | |
| Ford Fiesta | €1,113.42 | £884.63 | £560.45 | |
| Vauxhall Corsa | £1,075.47 | £851.22 | £560.45 | |
| volkswagen golf | £955.80 | £823.64 | £569.85 | |
| From GoCompare, all quotes are the cheapest available | ||||
Much like the premium example above, people living in zip codes considered riskier by insurers tend to pay higher deductibles.
But this is not true in all areas. For example, our example of a driver insuring a Ford Focus would pay an excess of £150 in East London – the ‘riskiest’ area we tested.
This excess amounts to £350 for West London and Shropshire.
For other cars, the mandatory deductibles remain the same regardless of location.
| Car | east london | West London | Rural Shropshire |
|---|---|---|---|
| Land Rover Range Rover | £1,400 | £1,400 | £650 |
| Land Rover Discovery | £500 | £500 | £350 |
| volkswagen golf | £350 | £350 | £250 |
| Honda Jazz | £500 | £500 | £250 |
| Mercedes E-Class | £350 | £350 | £350 |
| From GoCompare, all quotes are the cheapest available | |||
Another factor that varies depending on where you live is the number of insurers willing to give you a quote.
More quotes equals more competition, which normally means a higher chance of a consumer getting a lower price.
But for every car we tested, the number of insurers willing to give a quote dropped dramatically based on the perceived risk in an area.
A person insuring a Range Rover in Newham would only have a choice of four insurers, for example, while the driver in Shropshire would have 16.
| Car | east london | West London | Rural Shropshire | |
|---|---|---|---|---|
| Ford Fiesta | 30 | 38 | 42 | |
| Honda Jazz | 27 | 31 | 46 | |
| Vauxhall Corsa | 27 | 41 | 44 | |
| volkswagen golf | 24 | 33 | 34 | |
| BMW 3 Series | 18 | 20 | 26 | |
| Mercedes E-Class | 16 | 23 | 31 | |
| Land Rover Discovery | 11 | 14 | 22 | |
| Range Rover | 4 | 11 | 16 | |
| At GoCompare | ||||
A spokesperson for the trade body Association of British Insurers said: ‘Your postcode can impact the cost of your car insurance, for example by reflecting the car crime rate where you live.
“But it will be one of many factors an insurer will take into account – such as your age, claims history and type of vehicle – when assessing your risk.
“You may not be able to do anything about where you live, but car insurance is competitive, so you can shop around to get the best car insurance deal for your needs.”
> Read the This is Money guide to reducing the cost of car insurance
