UK car insurance groups explained: what do they mean for you and your car? - 07/02/2017

UK insurance group ratings run from 1 to 50 and are set by the ABI – here’s how it all works....

The need for an annual car insurance quote is one of the frustrating aspects of car ownership. Yes, we know we need to be covered, but why can’t our car insurance company be relied on to give us the best deal each year? Instead, annual insurance premiums seem to rise inexorably, with companies taking advantage of ‘automated renewal’ notices to hike prices safe in the knowledge that most drivers are too busy to pay much attention.

Cynical? Us? Well maybe, but we know we’re not the only ones to share that view. It’s why the car insurance comparison websites are thriving, as sensible drivers take the opportunity to shop around for car insurance online.

Shopping around is a good way to save money on a car you already own, but if you know running costs are going to be an issue upfront, you’ll need to start thinking about the insurance group rating of any potential purchase before you set your heart on it.

Car insurance groups are how the insurance companies set your premiums, and they’ve been a part of the motoring scene for nearly 50 years. It’s actually been against the law to drive without insurance since the 1930s, but insurance groups were not introduced until the 1970s, when the industry decided create an easily understood rule of thumb for which cars are most expensive to repair and replace, and/or most likely to be involved in costly accidents due to their performance.

Nowadays, each new model derivative (and most sold since the 1970s) has an insurance group rating applied by the Association of British Insurers (ABI). The original group ratings were from 1-20, but since 2009 the current much broader insurance group ratings of 1-50 have been used. That means there’s scope to award different ratings to different specs and trims within model ranges. If you want a good illustration of that that can mean, consider the Audi A3 line-up which starts at insurance group 18 for the basic 1.6-litre diesel three-door, but shoots all the way up to insurance group 46 for the sporty S3 Cabriolet. As you would expect, the higher the insurance group rating, the higher your premium is likely to be.

How are insurance groups calculated?

The ABI works in conjunction with vehicle security and repair expert Thatcham to compile the insurance classifications for UK cars. The two main areas of research are how much damage a car sustains in a collision and how cheap and easy it is to repair after an incident. The experts factor in a number of points when setting an insurance group, including:

• Parts availability and price: For repair purposes, Thatcham uses a list of 23 commonly damaged parts for pricing, in the same way the Treasury's basket of goods is used to calculate inflation.
• Performance: The manufacturer-quoted 0-62mph acceleration figure and top speed of a specific car are taken into account.
• Repair costs: Thatcham performs its own low-speed crash tests (chiefly a 15km/h impact) and engineers determine the cost of parts and labour to return a car to its pre-accident condition.
• Price when new: The vehicle list price is used to calculate the cost of a settlement if the car is written off.

Data for these comes from Thatcham's own tests, although in the case of parts and labour these prices are sourced directly from the vehicle manufacturer.

Once all of these factors are taken into account, Thatcham then classifies each new car into the 1-50 insurance groups, and then a security rating is given. At the top end, cars with excellent security features, such as can move into a lower insurance group, while vehicles with poor security are placed into a higher group and therefore the cost of insurance is increased.

What else determines a car's insurance group?

Thatcham also tests vehicle security, according to the New Vehicle Security Assessment programme. Theft is still one of the chief reasons for an insurance claim, so the security of a vehicle will qualify it for a lower insurance premium. Thatcham breaks down cars with the following suffixes after a car's insurance group number:
• E: Exceeds the security requirement for the type of car, so the insurance group rating has been lowered.
• A: Acceptable level of security for the type of car.
• D: Doesn't meet security requirements for the type of car, so the insurance group rating has been raised.
• U: Unacceptable standard of security. An insurer may insist on upgraded aftermarket security before they agree cover.
• P: Provisional. Not enough data is available at the time of launch to classify the car. This will likely be amended once a new car has become available for Thatcham to evaluate.
• G: Grey import. Thatcham only tests cars that are officially sold in the UK, so imports are only evaluated at a price that the insurer sets.

As mentioned above, security ratings can increase or decrease a car's overall insurance group. A group 8 car with an excellent security rating will be moved down to group 7, and rated as 7E. Conversely, a group 8 car with a poor security score will be moved up to group 9, and rated as 9D.

Another way for a car to improve its insurance group rating is by offering a high standard of safety. If autonomous emergency braking is fitted as standard, for example, a vehicle can drop one group once it's been tested by Thatcham. Other advanced active safety aids can also have a positive effect on the insurance grouping of a car, as long as they are standard-fit equipment.

Different versions of the same car will also be in a range of insurance groups, as engine performance and trim level affect premiums. A base level Ford Fiesta Studio fitted with the 1.25-litre engine is way down in group 5, but the same car in Titanium X trim with the 125bhp 1.0-litre EcoBoost engine is in group 16.

UK insurance groups history

When the group system was established over 40 years ago, cars were classified in just nine insurance groups. In 1992, this was increased to 20, but with ever-increasing diversity in the new car market, the current 50-group system was introduced in 2006.

Vehicles from the 10 years prior to the new system being introduced – 1996 or later – are classified according to the same 50 groups as new cars are today. For cars built before 1996, premiums are calculated based on an insurer's own experience.

What do insurance groups mean to me?

Broadly speaking, the higher the insurance group, the more expensive insurance will be. However, it’s not quite as simple as that. Insurers aren’t bound to follow the ABI guidelines that Thatcham sets, and will use their own judgement and experience to decide how much to charge customers. For example, a stereotypical ‘boy racer’ car will attract a higher premium than one that’s more staid and sensible – even though the two vehicles might be in the same insurance group.

This can hit young drivers especially hard - the few cars that a 17-year-old can afford to buy and run will have their insurance costs pushed up even further as the insurer will have past experience with these cars being involved in collisions.

That's why it’s important that insurance groups aren’t the only factor when choosing a new car. Be sure to obtain actual insurance quotes rather than simply comparing on insurance group - you might be surprised how much two similar cars can differ on insurance costs. And of course, research heavily. It could be worth taking a small hit in terms of insurance cost for a car that will save money elsewhere - with excellent fuel economy, for example.

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