There are, we are told, two certainties in life: death and taxes. If you’re a driver, you can add car insurance to that list, too. Every car on the road must be covered by a policy, and you must be insured to drive whatever car you're driving, whether as a policy-holder, named driver or third party.
So the cost of car insurance really matters. Besides your age, driving history, and where you live, the insurance group that your car slots into is a significant factor in determining how much you’ll pay for your car insurance.
What’s more, even though you might not pay directly for your insurance, your wallet can still feel the effect of a high insurance premium. If you're a company car driver, for example, this might well be rolled into your deal with your employer, or the fleet manager may well studiously avoid makes and models in higher insurance groups. Here’s how car insurance groups work:
Car Insurance Groups Explained
- What is a Car Insurance Group?
- How Are Car Insurance Groups Determined?
- How is Car Insurance Calculated Overall?
- How Can You Cut the Cost of Your Car Insurance?
What is a Car Insurance Group?
Every car on sale in the UK is assigned an insurance group. These range from the cheapest cars to insure (group 1) all the way up to the most expensive (group 50). Before 2009, the group rating system was based on 20 different groups rather than 50, but these days a group-20 car is middle-ranking, rather than belonging to the most expensive insurance class.
Generally speaking, the cars that fall into the lower groups are low-priced, low-powered city cars. These include models like the Citroen C1, 1.0-litre VW Polos and the Nissan Micra. Cars in the top group include powerful performance cars and luxurious models, such as the 600bhp Audi RS6 Avant, Range Rovers and Porsche 911s.
Cars in a more middling bracket include the Audi A3, BMW 3 Series and Citroen Spacetourer MPV (all group 20) or the Ford Fiesta ST, Hyundai Ioniq 5 electric car and Mazda MX-5 (all group 30).
How Are Car Insurance Groups Determined?
Car insurance groups are worked out by a body called the Group Rating Panel. This is made up of representatives of the Association of British Insurers (ABI) and Lloyds Market Association (LMA) and administered by Thatcham Research.
To work out a particular car’s insurance group, the panel considers various elements. These include:
-
Parts repair costs and the repair cost of potential damage
-
Repair costs and repair times
-
New car values (to work out the cost of like-for-like replacement, the panel considers the cost of equivalent brand-new replacements in the case of a full insurance write-off)
-
Parts prices (using a list of 23 common parts)
-
Car performance (statistically, high-performance cars lead to more frequent claims)
-
Safety features (a better safety rating, and high-tech safety aids such as autonomous emergency braking - also known as AEB - will help a car slot into a lower insurance group
Another area of importance for insurers is car security systems: the better the anti-theft security features on a car (such as trackers or immobilisers), the lower the insurance premiums. That’s why you’ll also notice that cars have a letter suffixed to their insurance group number. This is Thatcham’s way of breaking down the effectiveness of a vehicle’s security systems. And they categorise car security as follows:
-
U: Unacceptable standard of security. This is when the car doesn’t meet basic security requirements, regardless of the type of car
-
D: Doesn't meet security requirements for the type of car. For example, more desirable cars will be sought-after by thieves so will need trackers or other sophisticated security systems to protect them
-
A: Acceptable level of security for the type of car.
-
E: Exceeds the security requirement for the type of car, so the insurance group rating has been lowered. This is what you want, ideally, since it means the car will be harder to steal or break into, as well as being cheaper to insure.
There are also two more unusual categories:
-
P: Provisional. If there’s not enough data available at the time of launch to classify the car, Thatcham will give the model a ‘P’ suffix.
-
G: Grey import. Since Thatcham only tests cars that are officially sold in the UK, unofficially or personally imported cars (known in the trade as grey imports) are only evaluated on a case-by-case basis and at a price that the individual insurer sets.
How is Car Insurance Calculated Overall?
As well as the insurance groups listed above, there are multiple factors that affect the cost of a car insurance policy, some of which you will have more control over than others.
Location
Where you live is quite important to the cost of your insurance. Generally speaking, postcodes with higher crime rates are deemed to be a higher risk for insurers, so will attract a higher premium, for example. This isn’t solely about vehicle theft; vandalism or the likelihood of accidental damage from a third party can push up the cost of insurance premiums in certain geographical areas, too.
Where you keep your car
Cars kept parked on the road overnight tend to be at higher risk than cars that are kept off the road, on a driveway or in a garage, for example.
Mileage
It’s a simple one, this: the more miles you do, the greater the exposure to the risk of an accident as far as the insurance company is concerned. Therefore, the fewer miles you do, the cheaper your insurance.
What you use your car for
When you take out an insurance policy, you’ll be asked to specify how you will use your car: for social use only, for domestic use and commuting, or for business use as well. All of this can have an effect on your premiums, depending on your insurer.
Your job
Some professions, particularly ones deemed to be high-pressure or that require lots of driving, can make your insurance premiums more expensive.
Your age
Younger drivers tend to take more risks and have less driving experience, so are deemed to be a higher-risk category, making their premiums more expensive. Conversely, after a certain age, the speed of people’s reaction naturally diminishes, or they might struggle with sight, hearing or physical movement. All of this can contribute to making older people more likely to be involved in an insurance claim, and thus their insurance costs are more expensive.
Young drivers (or drivers whose car insurance premiums are high for other reasons) could also potentially lower the cost of insurance by using black box telematics insurance policies. These record your driving behaviour and, as long as your driving is responsible, you’ll be rewarded with lower premiums.
Your driving history
Insurance is based on risk, which in turn means insurers prefer to see drivers with no claims or convictions. You'll need to disclose any such information when applying for a quote.
How Can You Cut the Cost of Your Car Insurance?
There are a few ways to help you minimise the cost of insurance, although some are more practical than others.
Build up a no-claims bonus (NCB)
The longer you go without having to make a claim, the lower risk you are as a driver, in the eyes of insurance providers. But you generally need to be a policyholder to build up a no-claims bonus, also known as a no-claims discount. For most insurers, it doesn’t matter how many years you’ve driven without an accident if you’re just a named driver on someone else’s policy.
But if you have built up a no-claims bonus for a few years, it can save you a significant amount on your policy: up to 80% if you’ve got around five years, and as much as 30% even for a single year.
You can lose your no-claims discount if you have to make a claim, but some policies do offer a protected no-claims discount, so you can make a claim if necessary without it affecting your premiums. This will tend to come at a cost, however.
Shop around at renewal time
If you let your insurer automatically renew your policy without thinking about it, you’ll often find the premium goes up. When it comes to renewal time, you can often find cheaper deals elsewhere. Shop around for motor insurance quotes by looking at price comparison sites or checking direct with other insurance providers. You don’t have to go with a new insurance provider, either; just get in touch with your existing provider and see if they can match a rival’s quote. They often will.
Pay for it all in one go
It might be more manageable to pay for your insurance in bite-sized monthly chunks, but it often works out cheaper overall if you can afford to pay it in a single lump sum.
Buy a car in a low insurance group
Sounds blindingly obvious, this, but it’s worth saying: if you’re in a high-risk insurance category due to your age, profession or driving history, then you can significantly reduce your premiums by buying a car model in a low insurance group.
Buy a car with a low market value
If you fancy cruising around in a luxurious car packed with the latest high-tech kit, then this won’t be for you, but the less a car is worth, the less an insurance company would have to pay for the cost of repairs or to replace it, and that can mean cheap car insurance for you.
Buy a classic car
Classic car insurance policies often offer significantly lower premiums than for more modern machinery. And you don’t have to be driving around in a 1950s Morris Minor, either. Most classic car insurance policies state that the car should be 25 years old at least, but some go as young as 15 years old. There is generally a limit of 5,000 miles per year on a classic policy, however.