How car insurance groups affect your premium

If you are like most people in the UK, you may be unaware that the car insurance group of your vehicle can be a significant determining factor in the price of your premium. There are 50 car insurance groups in all, and the lower your car is grouped, the lower your premiums will be. So, if you are paying more than you would like on your car insurance, trading in your speedy auto for a less expensive car might be a wise idea.

Car insurance groups provide insurance companies with a reasonable indication of risk, with vehicles in group 50 being the most risky to insure and vehicles in group one being the least risky. Typically, high-performance “super cars” take up the highest spots, because they often lead the pack in terms of claims payouts.

How car insurance groups are decided

Every new car built for the UK market is issued a classification by the insurance industry’s Group Rating Panel, which meets every single month to review new vehicle releases. Comprised of members from Lloyds Market Association and the Association of British Insurers, the panel receives nearly three quarters of its data from Thatcham, a group that performs extensive research on the safety, efficiency, and cost-effectiveness of repairs on various vehicles.

There is a little flexibility in exactly how much the Group Rating Panel affects the insurance premium cost of a vehicle, because the findings of the panel are only viewed as recommendations. Thus, insurers are not bound to their decisions and may establish their own groups if they choose to do so. However, insurance companies tend to closely follow the panel’s recommendations and premium prices stay relatively consistent across insurers.

Before 2007, there were only 20 car insurance groups, but Thatcham revised the system to include 30 additional groups. This allows every car model to be grouped with cars that more accurately reflect their similarities.

How car insurance groups are allocated

According to statistics gathered from the ABI, more than half of all of the money that is paid out each year in car insurance claims is spent on vehicle repairs. This plays a significant role in determining how each group is defined. The following factors are taken into consideration when classifying car insurance groups:

Cost of Parts – Thatcham performs an in-depth assessment of how much damage a specific car model might experience in an accident. The cost of each part involved in repairing the vehicle is factored into the equation. Obviously, the more expensive it is to repair or replace each part, the higher the car insurance group a vehicle will be placed in.
Availability of the Body Shell – In addition to parts, whether or not a body shell is easily available for a particular model of car can also affect its grouping, because a body shell may be needed to repair the car.
The Cost of Labour – The labour associated with car repairs can be quite expensive. In fact, in many cases, the cost of labour is much more expensive than the cost of replacement parts. So, the longer it takes to fix a car, the more expensive the repair will cost, which results in a car being placed in a higher car insurance group. A variety of factors, such as the complexity of the paint finish, is taken into consideration.
Value of a New Car – Typically, the purchase price of a new car is often an indication of the repair or replacement cost of the vehicle. Thus, this is taken into account as well.
A Car’s Performance – In general, high-performance cars result in a greater number of insurance claims. So, if a car is well-known for having a high top speed or rapid acceleration, it will usually be placed in a higher car insurance group.
Level of Security – Vehicles that come standard with certain security features often result in lower insurance costs for drivers. Due to the fact that cars with security features are less likely to be stolen, they are often placed in a lower car insurance group. Immobilisers, alarms, easily identifiable Vehicle Identification Numbers, coded equipment, wheels with locking devices, and high security door locks are common security features that are taken into consideration by the Group Rating Panel.

Determining the car insurance group of your car

You can easily find out what car insurance group your vehicle belongs to by visiting the Thatcham website and using their car insurance group calculator. When using the calculator, remember that the lower your grouping, the lower your car insurance rates will be. It is also important to keep in mind that car insurance groups may vary slightly by insurance company. However, car insurance companies tend to regard the car insurance groups developed by Thatcham as rather accurate indications of how safe specific car models are and base their premiums accordingly.