As a motorist you're bound to have heard mention of 'Insurance Groups', but what do you really know about them? Quoteline Direct takes a peek under the Insurance Industry's bonnet to see how premiums are really calculated.
The year is 1969 and there's a lot happening in the UK insurance industry. It's the year that our parent company (Wilsons Insurance Group) began life on the High Street, and it's the same year that the 'Group Rating Panel' was born. Frustrated with the increasing amount of time and effort needed to calculate premiums; the Group Rating Panel brought together a number of leading insurance providers to help streamline and standardise the process.
The Group Rating Panel meets every month to 'rate' new cars on a scale of one to fifty. Cars in Group One represent the least risk to insurers and the lowest premiums to drivers. Accordingly Group One comprises mostly compact run-arounds such as the Toyota Aygo or Fiat Panda. At the other end of the scale Group Twenty is home to high end performance cars such as the Mercedes Benz McLaren Roadster and the Porsche Cayenne.
In order to help with the decision making process the Group Rating Panel leans heavily on the research carried out by the Motor Insurance Repair Research Centre, which is more commonly known as 'Thatcham'. They look at a number of criteria including the following:
Performance: As a rule of thumb you can expect the Insurance Group to rise with the size of the engine. Insurers also consider acceleration and top speed, which explains why it's more expensive to insure a 'super mini' or a 'hot hatch' than a larger family saloon.
Purchase Price: It's hardly surprising that the value of a car will have a significant bearing on its' Insurance Group. However, not everybody knows that all those 'extras' (especially metallic paint finishes) can seriously bump up your premium.
Spares and Shell: Insurers factor-in the cost and availability of any spare parts which may need replacing if the vehicle is involved in an accident. The list includes everything from windows and doors to the entire chassis.
Repair Times: The length of time needed to fix a damaged car depends on the make and model. If there are a limited number of dealers who can carry out the work (especially with imported cars) you can expect: longer waiting times, higher labour costs and ultimately bigger premiums.
Car Security: Factory-fitted security features can help to lower a vehicle's Insurance Group. Remember that all new cars now have central locking and immobilisers fitted as standard, so you'll need to look out for 'extras' such as a vehicle tracking system or etched windows. For more on how improved security can cut the cost of your insurance read this article.
The cars on Britain's roads have changed a lot over the past 45 years and in a bid to more accurately reflect this diversity of vehicles Thatcham has developed a 'parallel' rating system of 50 Insurance Groups. The new grouping runs alongside the existing 20 Groups and is being used by an increasing number of insurance providers.
Remember that the insurance group is a key metric used in calculating your premium, but it isn't the only factor. Insurance companies look at a number of additional variables, such as your driving history and where you live, nevertheless it provides an invaluable starting point.
If you are thinking about buying a car ask the dealer about Insurance Groups or visit Parkers’ website to find-out online. It won't take more than a couple of minutes and could save you a fortune in the long-run.