UK car insurance groups explained: what do they mean for you and your car?

Shopping around for car insurance
25 Jan, 2016 5:00pm Tom Wiltshire

Everything you need to know about the UK's 1-to-50 car insurance group system and how it affects you

Car insurance is more expensive than ever – the price rose by just over £100 in 2015 alone. But how are these insurance costs calculated, and what do the UK's car insurance groups actually mean to you?

Cheapest cars to insure

Insurance groups were introduced over forty years ago as a way for insurers to calculate which vehicles are most likely to be involved in a claim. Every new car in the UK is given an insurance rating and classified into a group from 1 to 50. The higher the group number, the higher the insurance premium – as these are the vehicles that insurers feel pose the most risk.

Consequently, cars in high insurance groups are the most expensive vehicles to insure year after year. And of course, the vehicles in low insurance groups will quality for cheap car insurance premiums. Although, of course, there's a bit more to it than that...

How are insurance groups calculated?

The car security experts at Thatcham compile the insurance classifications in the UK on behalf of the Association of British Insurers (ABI). The two main areas researched are damageability (how much damage the car sustains in a collision) and reparability (how easy and cheap it is to fix the car after an incident). The experts take several factors into account when setting the insurance groups, such as:

  • • Parts availability and price: For repair purposes, a standard ‘basket’ of 23 commonly damaged parts is priced up.
  • • Performance: The car’s 0-60mph acceleration and top speed are taken into account.
  • Repair costs (parts and labour): Thatcham performs its own low-speed crash tests and engineers determine the cost of parts and labour to return the car to its pre-accident condition.
  • Price when new: This is used to calculate the cost of a settlement if the car is written off.

Data for these comes from Thatcham's own tests and in the case of parts and labour pricing, direct from the vehicle manufacturer.

With these factors taken into account, Thatcham classifies cars into insurance groups from 1 to 50. A security rating is then given. At the top end, cars with excellent security features 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 test vehicle security, according to the New Vehicle Security Assessment programme. Theft is the reason behind a huge amount of insurance claims - so a vehicle that is more resistant to theft qualifies for lower insurance. Thatcham classifies a vehicle's security features like this:

  • • E: Exceeds the security requirement for a car of this type so the insurance group rating has been reduced.
  • • A: Acceptable within the security requirements for a car of this type.
  • • D: Doesn't meet the security requirement for a car of this type so the insurance group rating has been increased.
  • • U: Unacceptably poor standard of security. Insurers may insist on upgraded security before they agree to cover you.
  • • P: Provisional. Not enough data was available at the time of launch to classify the car.
  • • G: Grey import. Thatcham only tests cars intended for the UK market, so imports are taken on at a price 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. The provision of autonomous emergency braking as standard, for example, can see a vehicle drop a 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.

Best car insurance companies

Manufacturers play a further part in determining insurance costs too. High parts prices or labour rates at dealerships are taken into account when deciding a car's grouping so if one manufacturer's dealers are more expensive, its cars could creep up the scale - even in cases where the cars are mechanically similar. 

Ford Fiesta - front

Different versions of the same car will also be in different insurance groups, as engine performance and trim level affects 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 9 insurance groups. In 1992, this was upped to 20 but with ever-increasing diversity in vehicles, the current 50-group system was introduced in 2006. The same system is used to this day.

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. You can check out the cheapest cars to insure here - these are all cars with a group 1 or group 2 rating, and as such should be affordable to insure.

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.

Cheaper car insurance for young drivers

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.

This is 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.

How much do you consider insurance cost before choosing a car? Let us know in the comments below...

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