What are car insurance groups?

Car Insurance Groups are important factors that have an impact on the cost of your premiums. Whether it’s your first car or the car you have always dreamed of, we all have something particular in mind when purchasing our vehicle. Perhaps it’s the colour, style, model or year – there are a multitude of factors that influence the car we choose, and the insurance group a car may fall into should also be one of them. So before you rush out and buy that car, be sure to check out our handy guide which will enable you to demystify the Car Insurance jargon and help you understand Insurance Groups and how they can impact your premiums.

Car Insurance Groups Explained

Initially what Car Insurance Groups are and how they affect the cost of your insurance can seem confusing. How they are determined and impact your insurance is simple. Unlike other insurance groups, e.g. motorbikes, Car Insurance Groups are set by an official body called the Group Rating Panel, whose members include the Association of British Insurers (ABI) and Lloyds Market Association (LMA). These members take a multitude of facts, figures and statistics and convert them into the group system, resulting in every new car model and spec now falling into one of the 50 groups.

As cars and car technology are advancing so quickly, these members meet monthly to review all the cars in each band. These reviews are focused around factors such as engine size, performance and retail price as well as statistical data based on the type of owner. Other factors such as parts and labour costs when a car needs repairing are also taken in to account. Top- range models tend to have more expensive parts and are thus entered in the high groups, whereas lower-end cars are likely to have cheaper parts and fall into the lower-priced groups. Engine size is also a factor. Drivers of cars with smaller engines are considered to face less risk of being in a car accident and thus tend to have lower premiums, whilst drivers with powerful engines tend to be considered higher risk and more likely to be in accidents, as reflected by the higher premiums.

So the general rule of thumb is the higher the group your car is in, the higher the premium will be.

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