GUIDE TO CAR INSURANCE GROUPS
Car insurance is calculated using a number of rating factors and the insurance grouping of a car has a significant effect on motor insurance premiums. For instance, a BMW M3 will cost more to insure than a Ford Fiesta. This is mainly due to the differences in value, performance, cost of repair, security and cost of parts between the two vehicles.
Due to the vast number of different vehicles available and the varying specification of models, every car is assigned a motor insurance group in order to provide a simpler insurance rating factor. There are 50 groups in total (the previous grouping system featured just 20 groups and was replaced in 2007) and the cars with the lower insurance grouping typically pay less for motor insurance and the higher the car insurance grouping will normally pay more. So where do these groupings come from and who assigns cars to different groups?
WHO ASSIGNS A CAR TO AN INSURANCE GROUP?
A Group Rating Panel will allocate every car manufactured in the UK into their respective insurance group. To ensure that they are able to do this accurately they use research conducted by The Association of British Insurers (ABI), Lloyds Market Association and Thatcham. Thatcham provides 70% of the data insurers use to define motor insurance group as well as testing vehicle security systems and safety features.
The Group Ratings Panel will provide their recommended ratings for each vehicle to insurance companies who do have the option of setting their own groupings if they choose.
From an insurance perspective, the cost of repair is an important factor. The ABI claims that more than half of the money paid out in insurance claims is to cover the cost of repair and therefore this has a big influence on the insurance group rating. An explanation of the other factors considered when applying motor insurance groups can be found below:
COST OF PARTS
The cost of repairing or replacing car parts is factored into a vehicle’s insurance group. Basically, the more expensive the car parts are to repair or replace, the higher the insurance group is likely to be.
TIME OF REPAIR
The time it takes to repair the vehicle will have an influence on the insurance rating. Labour costs are influential and if it takes longer to repair a vehicle it will undoubtedly cost more to insure.
High performance cars are statistically more likely to be involved in insurance claims and tend to be more costly. This is why cars that have fast acceleration and high top speeds will usually have a higher insurance rating.
The less likely a vehicle is to be stolen, the lower the insurance group. Features such as alarms, immobilisers, high security locks and coded audio equipment are more likely to generate a lower insurance group rating.
WHAT IS YOUR CAR’S INSURANCE RATING?
If you are considering buying a car it is wise to consider the vehicle’s insurance group classification in order to give an indication as to potential insurance costs. Insurance companies do not use insurance group rating in isolation to calculate car insurance quotes. There are many other insurance rating factors which they take into account; however, the insurance group rating will give at least a relative indication when different vehicles are being compared.
A full list of motor insurance groups and the cars within each group can be found by visiting the Thatcham website.
Be sure to shop around and compare car insurance and get the best deal possible, even if your car has a high insurance group rating! If you would like other tips on how to reduce your motor insurance read the MyMoneycomparison guide to car insurance.