UK Car Insurance Groups - How They Affect Your Premium

You may or may not know that when you insure your vehicle, its car insurance group can be a determining factor in calculating the premium. There are 50* insurance groups, and the tendency is that the lower the car is grouped, the cheaper the premiums are likely to be. So if you�re hoping to reduce your premiums, then �downgrading� to a car in a lower group isn�t a bad idea.

The groups give an indication of risk to insurance companies, with 50 being highest and one being lowest. High performance cars will typically occupy the higher slots, and are likely to incur the largest costs for insurers in terms of claim payouts.

Who decides a car insurance group?

Each new passenger car built to a UK specification is classified by the Group Rating Panel, who meet on a monthly basis. This panel is comprised of members from the Association of British Insurers (ABI) and Lloyds Market Association (LMA). 70% of their data is supplied by a group called Thatcham, who do a lot of research into the efficient, safe and cost-effective repair of vehicles.
There is a little bit of give and take in how the findings of the Group Rating Panel will affect a premium. This is because the proposed groupings are recommendations only, and hence are not binding on insurers, who can set their own groupings if they choose. However, variations between insurance companies are unlikely to differ vastly.
*Previously, there were 20 groups. However, Thatcham introduced the 1-50 system in 2007, and insurers have until December 2009 to migrate to the more expansive group for their premium calculations. This means that each model of car tested can be banded more accurately with similar cars.

How are the insurance groups allocated?

Over 50% of the money paid out in car insurance claims goes towards the cost of vehicle repairs, according to figures from the ABI. This has an obvious bearing on how the groups are defined. The principle factors considered to group cars are as follows:

Cost of damage to parts

This is an assessment of the extent of damage that a car model might incur, and the cost of the parts involved in its repair are factored in. Essentially, the cheaper it is to replace or repair these parts, the lower the grouping is likely to be.

Body shell availability

Group ratings can be affected by the availability of body shells in addition to parts, because they may well be required in the repair of damage to a car.

Time it takes to repair a car

This is essentially a costing of labour� the longer it takes to fix, the more it�ll cost � which is likely to get the car a higher grouping. Factors such as achieving the right paint finish on modern cars will be taken into consideration.

Value of new cars

The cost of new cars are usually an indication of the cost of replacement and repair, so that is also taken into account.

Performance of the car

High performance cars have a tendency to bring about more frequent insurance claims � so if the car�s a bit handy when it comes to top speed and acceleration, then it�ll probably get a higher group rating.

Level of security

A driver may achieve cheaper motor insurance when security features come as standard in vehicles. So the more secure the car, the more likely it is to achieve a lower grouping, as it is less likely to be stolen. Features that are taken into consideration include alarms and immobilisers, high security locks on doors, visible Vehicle Identification Numbers (VIN), glass etching, coded audio equipment, and locking devices for �pinchables� such as alloy wheels.

So what�s my car�s insurance group?

You can find this out by visiting Thatcham�s car insurance group calculator on their website. At the time of writing, you can find out what group your car (or any car you�re thinking of buying) falls into on both the 1-50 and old 1-20 scale. Don�t forget that different companies may group cars slightly differently � but this should still be a pretty accurate indication of how much of a �safe bet� the car is in the eyes of the insurance companies.