Deciphering UK Postcodes:

5-Nov-2011 by SimplyPostcode™

Believe it or not, our postcodes are incredibly valuable little pieces of information that companies are always taking into consideration when quoting us for a product. Whether it’s your car insurance, home insurance, house price, council tax, life insurance or annuities, your postcode has a crucial role to pay in any annual premiums you pay.

Postcode Letter Combinations

So what is it about these basic letter combinations that have such a huge impact on how much we pay. Beginning at the basics, you will discover that UK postcodes usually fall into one of the following formats:


Considering that there are approximately 1.5 million UK Postcodes, there is an awful lot of data to maintain and monitor. In the above examples, where ‘L’ represents a letter, and ‘N’ a number, the first letter (or pair of letters) identifies the area, the following number the district and so on. Typically, a fully UK postcode represents a street, a part of a street or a small village. Each unique code usually limits the area down to around eighty properties.

The postcode is split into two separate parts – the section prior to the space is known as the ‘outward code’ and is predominately used to route mail to the corresponding regional sorting office. The part after the space is known as the ‘inward code’ and is used to sort the mail into individual delivery rounds from that specific sorting office.

Interestingly, all letters of the alphabet are used as part of the ‘inward code’, apart from C, I, K, M, O and V. This is to ensure postcodes written by hand are not mistaken for alternative letters and sent in completely the wrong direction.

Using Postcodes

When it comes to using your postcode as an analytical piece of data, car insurers are virtually at the top of the list when it comes to using it as a spurious statistic. More often than not, you will be paying over the odds for your insurance, just because of your surrounding neighbours’ terrible driving. The most important factor when it comes to car insurance is remembering you are perceived entirely as a risk. You may have been driving for thirty years without ever having an accident, but if you live in a high-accident, high-crime area your insurance company will not care. There are only interested in one thing: how likely is it that you will crash your car and end up costing them money? Unluckily, if you live in specific postcode areas of London, Ireland or a variety of other places and statistics show that these areas have particularly high accident records, your insurer will ramp up the premium ‘just in case’.

We have one of the most complicated postal code systems in the world; many organisations from outside the UK simply don’t use the system which often results in millions lost in revenue and wasted postage. Therefore, it is imperative that all companies refer to and use the PAF postcode address file created and maintained by the Royal Mail. This is the most up-to-date database of all UK addresses and has become an invaluable tool for creating and maintaining mailing lists and databases, through which Simply Postcode Lookup have created their software.