OSV Lessons: How do car insurance groups work?

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Car Insurance Groups Explained

Having to pay that insurance premium is probably the least attractive aspect of owning or leasing a car. To avoid any ‘nasty surprises’ down the line and to ensure you don’t waste any time looking at models that are outside your comfort zone in terms of premium costs, it’s definitely worth understanding what car insurance groups mean.

Car Insurance groups: what are they and who decides on them?

The car insurance group system is what the insurance industry uses to calculate the appropriate levels of premiums on vehicles. Each month, a group of representatives from the motor insurance industry meet to agree and recommend the appropriate insurance groups for new cars built to UK specifications. This is referred to as the Group Rating Panel. The Panel includes representatives of the Association of British Insurers (ABI) and the Lloyds Market Association. In order to reach its decisions, the group relies on expert information from the Motor Insurance Repair Research Centre (MIRRC).

There are currently 50 insurance groups in the UK (previously there were 20). The vehicles in the highest numbered groups cost the most to insure and those in the lower numbered groups cost the least. The system is designed to encourage consistency and fairness. Nevertheless, it’s worth bearing in mind that the insurance grouping system is an advisory service for the insurance industry. It is of course still up to the individual insurers to set their own premium levels – hence the importance of shopping around when looking for car insurance.

How are car insurance groups calculated?

There are several factors taken into account:

  • Damage and parts costs. The Panel considers how vulnerable the particular model is likely to be to damage and the likely cost of replacement. Obviously, the lower the cost, the more likely it is that the vehicle will be assigned a lower insurance group number.
  • Repair times. It is, of course, the case that the more work is required for a particular repair, the more expensive it is likely to be.
  • New car values. It is recognised that the new purchase price of a car can be a useful indicator of the likely cost of replacement and repair.
  • Parts prices. The Panel draws from a standard list of 23 common parts to compare manufacturers’ parts costs. The lower the costs, the more likely it is that the car will be placed in a lower insurance group.
  • Performance. The Panel looks carefully at acceleration and top speed. High performance cars are more likely to be the subject of insurance claims and this is likely to be reflected in the grouping.
  • Safety. An Autonomous Emergency Braking (AEB) system is designed to minimise the risk of low speed front to rear accidents. Where a car is fitted with one, this is likely to reduce the rating.
  • Bumper Compatibility. The alignment and build of front and rear bumpers will effect how well the car comes out of a rear shunt accident.
  • Car Security. Features such as immobilisation systems, anti-tamper security locks, glass etching, visible VIN numbers and protection for alloy wheels and audio equipment can all reduce claims costs. A separate lettered suffix is added to the group number for each vehicle to indicate whether security levels meet the standard requirements for the group. The main suffixes are as follows:

A= Meets the standard for the group

D= Does not meet the requirements for the group and the group rating has therefore been increased

E= Exceeds the requirements for the group – resulting in a group reduction

P=Provisional – the data was incomplete at the time of assessment

U=Unacceptable. Insurers may require additional measures before cover is provided

Remember: insurance group numbers are only part of the story.

The group system is designed to assess different models. Lots of other factors will of course determine the price of your premium. These include any alterations you make to the car, your age, occupation, address, points on your licence amongst many other things. However, knowing how the group numbers work is a useful starting point when deciding which cars to look at.

Are you still confused about how they work? Let us know why in the comments.

Featured image from The AA.
who pays for insurance on a lease car
Andrew Kirkley
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