Are post-code premiums fair?: James Ruppert looks at the cost of car insurance across the capital

When it comes to running a car in London there are constant traffic jams, perennial parking problems and inch-thick grime that coats paintwork to contend with. But those are the least of the problems, because the worst aspect of owning a car in the capital is insurance.

The privilege of being both city dweller and motorist invites inflated premiums and, in some cases, it is difficult to secure any cover at all.

So is it fair that those of us with a London postcode should pay more? And how can insurance companies and brokers justify this? According to the Association of British Insurers, which represents the industry, the problem with the Greater London area is the sheer number of vehicles.

'The more cars there are, the greater the chances of having a bump,' says spokeswoman Suzanne Moore.

'That may sound obvious, but about 70 per cent of your premium pays for accident damage. Car crime is a big problem, whether it is theft of, or theft from vehicles, but that accounts for only about 16 per cent of your premium.'

By driving carefully and defensively we can build up no-claims bonuses and reduce our premiums, although where you park your car is important.

What does the ABI have to say about your postcode? 'That is a matter for the individual insurer. They all have different experiences of each area and assess the risks and price the premium accordingly. That's why we recommend Lordoners shop around before placing their cover.'

The ABI also recommends that we do as much as possible to prevent car crime by fitting anti-theft devices. This can mean substantial discounts on a premium. For a list of approved devices and beat-the-thief tips, a free leaflet is available.*

Tony Kerfoot, at General Accident, followed the ABI line and had the statistics to prove that greater traffic density, on-street parking and declining driving standards substantially increased premiums.

'If people want to reduce their premiums, they should avoid hot hatches, BMWs, or Mercedes that attract thieves and vandals. However, we do offer a 10 per cent discount if approved alarms and immobilisers are fitted, including the 'Tracker' system.

'Customers can also pay a higher excess, so that they meet a larger proportion of any claim. We also think it is unfair that customers should lose out on a no-claim bonus when an accident is not their fault, so we introduced the Super Bonus scheme, which would be ideal for Londoners.'

Kerfoot insisted that his company does not discriminate against capital car owners, but simply insures the risk rather than the location. Liz Watson, at Commercial Union, proved that a 40-year-old GTi driver in NW1 willing to incur a pounds 250 excess would save pounds 110, and pounds 380 for fully comprehensive cover. 'With older cars, third -party insurance offers even greater savings.'

At the other end of the spectrum is Direct Line, a successful telesales-based company which has been accused of cherry-picking the lowest risks and leaving areas like London well alone.

Spokeswoman Miranda Pound disputes this. 'London is not singled out, and we do not 'red-line' any particular area. We assess each individual according to the car he or she drives.' Direct Line does not offer discounts in return for fitting anti-theft devices, although this is under review.

No insurance company wants to admit that it has 'no cover areas within London and most refuse to disclose such information. So full marks to Norwich Union for highlighting SE, SW and W postcodes, although General Accident was more specific about its high-claim hot-spots.

With an A to Z and a Pickfords van you might just be able to move in the right direction for insurance purposes. The pariah postcodes start in the badlands of east London: E1 to E3, then E5 and E17, so Tower Hamlets, Newham and Hackney should be given a wide berth, while over in the Wild West End, the sunny Southall districts of UB1 and 2 are the other claim-high codes. UB3, 4, 5 and 17 are the marginally more acceptable faces of Uxbridge.

North London's prime targets are N7 and 16. Should you veer west, then NW2, 6, 9 and 10 take you towards the North Circular outposts. South of the river, Bermondsey is the sole SE1 representative, as all the claims action seems to happen over at the SW districts of SW2, 9, 16 and 17.

Exactly how does this postcode discrimination work in practice? Posing as a 33-year-old accountant, with a blemish-free driving record and full no- claims bonus, piloting a blameless little 1993 Nissan Micra, but living within the dreaded E1 area, I picked up the telephone.

Wanting fully comprehensive cover and to protect my no claims, Churchills quoted pounds 372 while Eagle Star Direct offered the same cover for pounds 349. I then moved to the leafy suburbs of Ruislip and a friendly HA4 postcode. Nonetheless, Preferred Insurance could only come up with a hefty pounds 372. Back to Eagle Star, who came up with pounds 300. Simply by living and driving in London we are shortening the odds on making a claim - which means that it is all our fault.

So either give up driving, or move house.

*Association of British Insurers, Dept VS, 51 Gresham Street, London EC2V 7HQ.

(Photograph omitted)