Paying for insurance is one of the most painful elements of car ownership, but it’s a price everyone has to incur. It’s illegal to drive without insurance, as well as antisocial, but that doesn’t mean you can’t take steps to lower your auto insurance premiums — and that’s where auto insurance ratings come into play.
Just looking around is an obvious way to make sure you’re paying cheap insurance prices, as there’s often a big difference between the cost of the most expensive and cheapest coverage. The difference usually comes down to the type of protection and the extra services that competing insurance policies provide. You can often also adjust your premium by taking more or less risk via your deductible – the amount of any damage you have to pay yourself – and your mileage limit. Off-road parking, keeping your car parked and even living in a more or less theft-prone area will also affect policy prices.
Your age, gender, job and driving experience also play a role in calculating insurance policies, and it’s harder to change that! However, you can change your car to a model with a lower insurance group and potentially save hundreds of dollars.
What are auto insurance groups?
Auto insurance groups are the basic tool the insurance industry uses to set your premiums. We’ve had them since the 1970s when they were introduced to simplify the process of getting quotes and to help the industry assess risk when setting premiums.
Insurance groups are established independently of the vehicle manufacturers and are based on assessments by the Association of British Insurers (ABI) of how easy and inexpensive repairs can be made after an accident, and the vehicle’s level of performance as an indicator of the potential for the accident in the first place.
The original group ratings were from 1-20, but since 2009 the current much broader group ratings of 1-50 have been used. This means that there is scope to assign different ratings to different specifications and equipment within model ranges. If you want a good illustration of what that might mean, consider the BMW 1 Series lineup, which starts at insurance group 21 for the standard 1.5-litre petrol five-door, but extends to insurance group 36 for the sporty M135i hot hatch. As you might expect, the higher the insurance group’s rating, the higher your premium is likely to be.
How are insurance groups calculated?
The ABI is working with vehicle security and repair expert Thatcham to put together insurance ratings 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 it after an accident. The experts consider a number of points when setting up an insurance group, including:
- Parts availability and price: For repair purposes, Thatcham uses a list of 23 commonly damaged parts for pricing, much the same way the Treasury’s goods basket is used to calculate inflation.
- Performance: It takes into account the acceleration figure of 0-100 km/h specified by the manufacturer and the top speed of a specific car.
- Repair costs: Thatcham conducts its own crash tests at low speed (mainly a 15 km/h impact) and engineers determine the cost of parts and labor to return a car to its pre-accident condition.
- New price: The list price of the vehicle is used to calculate the cost of a settlement if the car is depreciated.
The data for this is from Thatcham’s own testing, although in the case of parts and labor these prices come directly from the vehicle manufacturer.
Once all these factors are taken into account, Thatcham then classifies each new car into the 1-50 insurance groups and then gives a safety rating. At the higher end, cars with excellent security features can be placed in a lower insurance group, while vehicles with poor security are placed in a higher group and therefore insurance costs are increased.
What else determines the insurance group of a car?
Thatcham tests vehicle security under the New Vehicle Security Assessment program. Theft is still one of the main reasons for an insurance claim, so the safety 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 safety requirement for the type of car, so the insurance group rating is lowered.
- A: Acceptable security level for the type of car.
- D: Does not meet the safety requirements for the type of car, therefore the classification of the insurance group has been increased.
- you: Unacceptable security standard. An insurer may insist on enhanced aftermarket security before agreeing on coverage.
- P: Provisional. At the time of launch, insufficient data is available to classify the car. This is likely to be changed as soon as a new car becomes available for Thatcham to review.
- G: Gray import. Thatcham only tests cars officially sold in the UK, so imports are only assessed at a price determined by the insurer.
As mentioned above, safety ratings can increase or decrease a car’s overall insurance group. A Group 8 car with an excellent safety rating is moved to Group 7 and is rated 7E. Conversely, a car from Group 8 with a poor safety score will be moved to Group 9 and rated 9D.
Another way a car can improve the rating of its insurance group is by providing a high standard of safety. For example, if an autonomous emergency braking system is fitted as standard, a vehicle may drop one group after being tested by Thatcham. Other advanced active safety aids can also have a positive effect on a car’s insurance grouping, as long as it’s standard equipment.
Manufacturers play a different role in determining insurance costs. High parts prices or labor costs at dealerships are taken into account when determining the grouping of a car. So if a manufacturer’s dealerships are more expensive, its cars can creep up the scale — even in cases where cars are mechanically similar. For example the Audi A3 and Skoda Octavia have similar running gear, but the Audi has insurance group ratings of 17-34, while the Octavia ranges from 12-20.
Different versions of the same car will also be in different insurance groups, as engine performance and trim level affect premiums. A basic level Ford Fiesta Trend fitted with the 1.0-litre 94bhp EcoBoost engine is in Group 10, but the same car in ST-Line X trim with the 138bhp 1.0-litre EcoBoost engine is in Group 15.
History of UK insurance groups
When the group system was introduced more than 40 years ago, cars were classified into just nine insurance groups. In 1992 this was increased to 20, but with increasing diversity in the new car market, the current 50-group system was introduced in 2006.
Vehicles from the 10 years prior to the introduction of the new system – 1996 or later – are classified into the same 50 groups as new cars today. For cars built before 1996, the 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 the insurance. You can check out the cheapest cars to insure here – these are all cars rated in Groups 1-3, so it should be affordable to insure.
However, it is not that simple. Insurers are not bound by Thatcham’s ABI guidelines and will use their own judgment and experience to decide how much to charge customers. For example, a stereotypical “boy racer” car will yield a higher premium than one that is more stable and sensible – even though the two vehicles may be in the same insurance group.
This can hit young drivers especially hard – the few cars a 17-year-old can afford to buy and use will drive up their insurance costs even further as the insurer has past experience of these cars being involved in collisions.
That is why it is important that insurance groups are not the only factor when choosing a new car. Be sure to get current insurance quotes rather than just comparing by insurance group – you may be surprised at how much two comparable cars can differ in insurance costs. And of course do a lot of research. It may be worth taking a small hit in terms of insurance costs for a car that saves money elsewhere – with excellent fuel economy, for example.
Which cars fall into auto insurance groups 1, 2, 3, and 4?As you might imagine, it’s small cars that are cheap to buy and repair that populate the lower auto insurance groups in the scale. In group 1 you will find models such as the Skoda Fabia, Nissan Micra and Hyundai i10, but it’s critical to remember that insurance group placement is determined based on the specific model, engine, and trim level you purchase. While the cheapest, least powerful Ford Fiesta is in insurance group 1, the more expensive, better equipped and faster models you will encounter as you climb the range will be in progressively higher groups attracting higher insurance costs.
Which cars are covered by Group 50 insurance? Bearing in mind that they are basically cheap cars in the lowest insurance groups, there are no prizes for guessing the type of cars in insurance group 50. Top class luxury sedans, SUVs and sports cars get the highest insurance group, but owners of Bentley Bentaygas, Audi R8s and Mercedes-AMG GTs will likely have the cash to bear the extra insurance burden. At the high end of the market, owners of exotic supercars from Ferrari, Lamborghini and even more exclusive brands will often use the services of an insurance broker to keep insurance costs in check.