There are several reasons why your car insurance premium will vary so much from insurer to insurer. Every insurance company will set a different premium rate for each car according to its own claims statistics. When an insurer is calculating your premium, there are some factors you have no control over, such as your age or gender. On the other hand, protecting your no claims discount or improving your cars security, for example, can lower your premium.

Every insurer employs a team of underwriters to assess the risk of insuring a particular car and person, and price their policy accordingly; the greater the risk, the greater the premium. The aim of the car insurance company is to achieve an excess of income over expenditure. If they suffer heavy losses in one year, they alter their rates in order to maintain underwriting profits. Car insurance companies will decide how much profit to make on each customer – new entrants looking to build a market share often shave their margins to attract new customers. Some insurers deliberately set sky-high premiums to certain categories of drivers, such as young drivers, to steer them away.

Insurers will consider many factors when determining your premium and most of us are familiar with the main ones. Your age can have the biggest impact on the cost of insurance. The younger and less experienced you are, the more likely it is that you will have an accident and make a claim on your insurance policy. Older drivers have fewer accidents, and so an insurer will reward them with a cheaper premium.

Each year you insure your car and do not make a claim on your policy, you receive a no claims discount. The more years of no claims you have, the cheaper your car insurance will be.

The insurance group of your car will have an impact on your premium. An expensive, high powered car with a rating of 20 will be more expensive to insure than a smaller, cheaper car with a rating of say 4. Insurers will also consider your cars engine size, as the more powerful a car is, the more likely it is to be involved in a high speed accident.

Gender is an important factor for insurers when calculating a premium. Female drivers, in general, have fewer and less serious accidents than male drivers. For this reason, women will be offered a lower premium on their car insurance than men.

Your occupation is another factor that will be considered by insurers. Car insurance companies will usually split occupations up into various categories. Journalists and TV presenters, for example, are viewed has a higher risk as they're perceived (for some reason) to be heavy drinkers. Nurses are regarded as more responsible and so deemed safer drivers. Also, if you are someone who travels regularly in your car as part of your job, you will be seen as being at greater risk of being involved in an accident. In general, the higher your annual mileage, the higher your premium will be.

Car insurers will place where you live into a risk category. For example, if you live in a built up area in the centre of a large city, your premium is likely to be far higher than if you live in a rural area. Don't be tempted to lie about where your car is kept. It is the oldest trick in the book, and if your insurance company discovers the truth, your insurance may be invalidated.

Insurers will also ask for details of any security alarm or immobilizer fitted to your car. Such features will deter thieves, and so result in a lower premium from your insurance company.

Your driving history will be of great interest to any car insurance company. If you have any driving convictions, points on your licence or have had any accidents in the past, you will be regarded as an irresponsible driver by an insurer and should expect a higher premium.

Of course, the most significant factor determining your premium will be the kind of cover you choose. Fully comprehensive insurance will be more expensive than third party, fire and theft or third party only.

There are some lesser known factors that car insurers take into account when determining your premium, like the colour of your car. Some insurers have found that if you have a red car, you're more likely to be involved in an accident, while black cars are more likely to be involved in accidents at night. Conversely, with white cars the opposite is found to be true. If you have a black or red car, you might just find you end up with a higher premium, and a lower one for a white car. Perhaps more surprising is that some insurers will increase your premium if you smoke, although not if you have a mobile phone. Most would consider talking on your mobile in the car to be more distracting than smoking a cigarette.