Cheapest postcodes for car insurance

New AA figures show where premiums cost the least... and where they cost the most.

Although the average price for annual comprehensive motor insurance has fallen by a record amount this year, according to AA figures, in some areas it has increased. But if you live in one of the cheapest areas, you'll be making a health saving as your premiums plummet.

Let's look at the cheapest and most expensive postcode areas.

The cheapest postcodes

The cheapest car insurance premiums can be found in the Isle of Man, which only has a population of around 85,000. And while that figure might not be helpful to those of us on the mainland, it’s notable that Scotland, Wales and the South West of England have towns that rate rather well against the rest of the nation.

All of the top ten postcodes have seen premiums fall in the last quarter, and the average price for insurance remains under £300 in each of them.

The most expensive postcodes

Meanwhile, in the UK’s big cities drivers are paying at least double the cheapest UK rates for their insurance. Five of the 10 most expensive postcodes have experienced falls in insurance prices, while five have had theirs increased.

But to take one example, even with a 7.2% quarterly fall, people in Oldham can still expect to pay almost £800 a year for their insurance, which is much more than double any of the cheapest postcodes.

London, unsurprisingly, sits at the bottom of the table; even after a 5% fall in the last quarter. Places 113-121 cover the postcodes W, NW, N, E, SE, SW, EC and WC.

The average cost reflects the number of expensive cars insured in the city, the density of traffic in London, which increases the risk of an accident on its streets, and the increased likelihood of theft or damage.

Postcode lottery

Janet Connor, managing director of AA Insurance, says postcode pricing differences are due to a range of factors, from the age and experience of the driver to the higher risk of a collision in an urban area. Also taken into account are the number of car crimes “such as theft of or from a vehicle, uninsured driving or attempts at ‘cash for crash’ fraud.”

“Sadly,” she says, “the criminality of some people has a detrimental effect of the premiums paid by honest motorists in such places.”

What next for premiums?

The current pattern of falling premiums can’t last, says Connor. Noting that there are “some signs of the downward trend reversing” due to average premium increases in some areas of the UK, she says that some insurers are looking ready to put prices up and believes “that this time next year, the AA’s Index will be reflecting a rising trend.”

However, she doesn’t forecast a sharp increase like the inflation between 2009 and 2011 when, over a 12-month period, premiums rose by more than 40%.