Car insurance groups explained: What are they and how do they affect me?

Posted on January 29, 2013 by Guest Writer
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Car insurance is an essential aspect of driving, but there are a number of things to consider if you want to keep the cost down.

For example, If you’re keen to lower your car insurance premium , it is well worth looking at which car insurance group you vehicle is in.

Cars that are in lower insurance groups often have a lower insurance premium. These groups are decided upon by the Group Rating Panel, which incorporates members of the Association of British Insurers (ABI) and Lloyds Market Association (LMA).

Each month the group meets to decide on an advisery insurance group for each new car that is built to a UK specification. Research is conducted by the Motor Insurance Repair Research Centre (Thatcham), and this makes up 70 per cent of the information used by the panel.

There are insurance groups ranging from 1 to 50, with this system being established in 2007, meaning that cars can be more accurately rated than they used to be.

How it works is simple – those cars that feature in the highest groups, which are typically high performance models, are likely to cost insurers the most in insurance claims. This charge is then likely to be passed onto the car owner. ABI noted that the cost of motor vehicle repairs accounts for more than half of the money paid out in car insurance claims. This means that repair costs are particularly important when it comes to forming the groups.

Insurers can either use the panel’s advice when working out insurance premiums for various cars. However, they can also choose to use their own groupings.

When it comes to categorising different cars into groups, there are many different factors that are taken into consideration:

Repairs – time and cost

If a car takes longer to repair, then the insurance company will have to pay more money for them, and so cars that are likely to be more complicated to repair will be in a higher group. It is also important to note that modern cars could cost a bit more as there are different paint finishes on newer vehicles.

Prices of Parts

The cost of parts is instrumental in working out what group a car will be put in. A list of 23 common parts is used to compare the cost from different manufacturers. The lower a certain manufacturer’s parts cost, the lower a car will feature on the list.

Damage and parts cost

This looks at how likely it is that a certain car model will be damaged, as well as the parts involved in its repair.

New Car Values

The group also takes the prices of new cars into account. These are a good indicator when it comes to replacement and repair.

Security

Security is considered here in terms of the features fitted as standard equipment by car manufacturers. If there is more security that comes with the car, this can help to drive down insurance claims. Things like alarms, immobilisation systems, door locks, glass etching, audio equipment and wheel locking devices are all taken into account.

Car performance

High performance cars often lead to more frequent insurance claims, so this factor features high on the list.