When we talk about pricing in car insurance terms we are basically referring to the price of the premium you pay every month for your insurance. It also refers to methods the insurance company use to arrive at the price they ask for car insurance. When car insurance companies calculate premium pricing they also use the term rating principles, or ratemaking.  These principles are used to calculate what is called a fair premium (in relation to the risk.) For further details on fair premiums see the glossary entry on this topic.

When you buy an item in a shop the price will be displayed and you know what you will receive for the price. When you buy car insurance it’s a totally different scenario. You are paying in advance for cover against something that may or may not happen, this is called price inversion.

Car insurance companies use statistical data from past experience to arrive at the price they ask you for your car insurance. There is no “one price for all” as each individual’s personal circumstances, age, gender as well as the details of the car you want to insure is taken into account. You should never accept the first price you receive for car insurance, shop around and compare pricing before you decide.