Car Insurance Groups Explained

July 25, 2013

All insurance premiums are based on statistical risk, they are not just made up by insurers. This rule also applies to vehicle insurance. Many factors are considered when insurers determine how much insurance you end up paying on your vehicle, one of the most influential is the insurance group. Who decides what car falls where though? And what do all those numbers and letters really mean? Our car insurance groups explained article aims to answer these questions for you.

Who Decides Car Insurance Groups

To help make the quoting process slightly easier and clearer for both brokers and customers The Group Rating Panel meet every month to decide on insurance groups for all new vehicle models. The panel consists of members of the Association of British Insurers (ABI) and the Lloyds Market Association (LMA). They decide on which vehicles fall into which grouping by analysing information provided by the Motor Insurance Repair Research Centre (MIRRC) at Thatcham.

Meeting Room for car insurance groups explained articleThe information that is provided by the MIRRC includes performance, security levels, body shell and parts prices, repair costs and new car price. But why is this information looked at? All the aforementioned factors affect how likely a driver is to claim and also how much that claim could cost the insurance company. For example, the owner of a higher performance car (think a Ferrari F12 Berlinetta Coupe compared to a Skoda Yeti) is statistically more likely to claim on their insurance policy, therefore the insurance companies must factor this into their calculations.

Similarly, security levels directly affect how easily a car can be stolen or damaged, the higher the security level the less likely a claim will be made. The body shell, parts and repair costs directly affect the insurance costs with regards to the fact the higher the prices are the higher the premium is likely to be.  The same can be said for the new car price. With all these factors determined and taken into consideration the Group Rating Panel will allocate the vehicle a number from 1 – 50 and a chosen letter. Bear with us, we’ve not quite fully explained car insurance groups yet.

Car Insurance Group Numbers Explained

Mathematical signs and numbers on a white background for car insurance explained articlePut simply, the higher the insurance group number the more risk the insurer associates with your vehicle therefore the higher your premium will be. For example, a vehicle in insurance group one (such as a SEAT MII Hatchback) has a lower premium attached to it than a vehicle in insurance group 50 (such as the Aston Martin V8 Vantage Roadster.) The associated letters are assigned by the Group Rating Panel to encourage manufacturers to make their cars as secure as they possibly can. Each letter means:

  • E – The vehicle has exceeded the security requirements for the insurance group.:
  • A – The car is acceptable. It has met the standard requirements for that insurance group.
  • P – This is a provisional award. This means that at the time of the vehicles launch the assessment was still incomplete.
  • D – The car is unacceptable. It does not reach the standard security measures for a car in its security group.
  • U – Very unacceptable. The vehicles security is well below the requirements for that insurance group. This rating can sometimes result in a security upgrade.

But what does each increase mean in monetary terms? A rough rule of thumb is that, for the first 15 groups, each increase will add roughly £30 to the cost of your premium. However, as the numbers get higher so does the rate of increase.

Now The Car Insurance Groups Are Explained…

Remember that they are not the be all and end all of an insurance quote. How clean your licence is, whether you have made any previous claims, where you live, where you park your car and more will also all have an effect on how much you end up paying for your car insurance. That being said, your cars insurance group is one of the things you can control when purchasing or leasing a new vehicle. If you were planning on buying or leasing a new car soon and were interested in what cars fell into the cheapest insurance group check out our list of the 100 Lowest Insurance Group Cars here.

Written by Ryan Hill