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Understanding Car Insurance Groups

One of the largest factors in determining the premium for car insurance is the insurance group that the car belongs to. There are 50 different groups for car insurance, and the lower the number the cheaper the insurance. As a result, motorists stand to save many pounds by being aware of what group their car is in, and looking for ways to get a similar car in a lower group.

Understanding Car Insurance Groups

Setting the Group

In the UK, an organization called the Group Rating Panel sets the insurance group for all cars that meet UK motor specifications. The panel meets every month and its members come from the Association of British Insurers (ABI) and Lloyd’s Market Association (LMA). This group uses a number of different metrics to sort cars into the various insurance groups.

Much of the information the group looks at has to do with cost-of-repair and safety standards so that they can effectively evaluate how much of a risk the vehicle poses, as well as what the cost will be to the insurance company should it be in an accident.

It is important to note that each car insurance company can still set their own group designations, as the Group Rating Panel’s allocations are not binding, but merely recommendations. However, the groups are not likely to be very different across the different companies, as the resources to rate every car in-house would cost far more than the savings and revenue such an effort could generate.

Some of the specific factors that the panel looks at to make these recommendations are:

  • Cost of damage to parts – the mechanical elements of a car that are most likely to be damaged in an accident are evaluated for price to determine the level of cost and risk insurers face.
  • Body Shell Supply – in addition to the mechanical elements of a car, the panel also evaluates the cost of replacing the bodywork and other exterior components of a car. If a car doesn’t have very many spare parts available, then it will be more expensive to insure.
  • Repair complexity – the panel evaluates how long it takes to perform repairs on different cars. This is because insurance companies have to pay for the labour needed to exact car repairs, and the more complex the repair process the more money insurance companies will have to pay.
  • Performance level – high performance cars result in more insurance claims from a statistical perspective. Therefore, the performance specifications of the car in question will influence the insurance rate that a motorist can get.
  • Security level – cars that are likely to be stolen will be priced higher than cars that have security systems or immobilizers. These systems decrease the risk that the car company will pay out for the theft of your car, and so they can lower the insurance group a car resides in.

There are many websites that offer a list of what cars are included in what insurance groups. One way that drivers can save money is to use these lists to find a car similar to the one they want that is in a lower insurance group. Many car companies produce motors that are broadly similar to the cars that they want to compete with on the market. Therefore, it is usually easy to find a car that has similar qualities to the one you desire.

It is possible for cars to be similar but in widely different insurance groups. The information above the relates to how a group is set for a particular motor explains this. If there are two cars that have similar performance attributes, but one has plenty of spare parts and is easier to repair, then it will likely be in a much lower insurance group than another car with similar performance capabilities. This insight is especially useful for motorists who are shopping for a new car and only know they want a type of car, but not the specific one. For example, there are crossovers in more than 9 different insurance groups, and the price for each of those groups is dramatically different. The same is true of hatchbacks.

 

If you’re looking for a new car and want to ensure you get the best insurance premium, check out the insurance groups you’re looking at and see if a car in a lower group will suit your purposes.