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What are car insurance groups?

For some years now, cars in the UK have been classified by the Association of British Insurers (ABI) into twenty car insurance groups.

Although only recommendations and not enforceable on member companies, the ABI car insurance groups are widely used as a benchmark in the car insurance industry. Therefore the group rating of a vehicle may vary slightly from car insurance company to car insurance company.

But how are the car insurance groups arrived at?

Each car model is grouped together with others displaying similar characteristics based on a number of criteria including such factors as cost when new, performance, potential damage and repairs costs and security. It’s therefore possible that within a particular model range there will be a significant difference in car insurance groups between the base model and the top of the range vehicle.

The cost of repair work and parts, it is estimated, accounts for more than 50 per cent of all car insurance claims. Therefore the costs of spares and the associated labour costs are major elements when car insurance companies work out their premiums, e.g. the turbo version of a car will cost substantially more to repair than the entry-level model. With repairs and parts playing such a crucial role in determining premium prices, it follows that it will cost more to get insurance cover for the top of the range model than the standard base model without the metallic paint, alloy wheels, air conditioning and all the other optional extras.

Car insurance companies, then, are pretty good at their sums. Generally, if the cost of repairs amounts to more than 50 per cent of the market value then a vehicle will be written off regardless of age or condition. As top of the range cars tend to cost more initially and retain their value for longer, the economics dictate higher premiums.

As a rule of thumb, the higher the car insurance group, the higher the cost of the premium. For instance, a small sensible one litre city car will be in Group 2 while a prestige model like a Ferrari or Porsche that’s capable of 150 mph plus will be at the other end of the scale on Group 20.

Performance and the desirability for car thieves are consequently factors that will gain a car a heavier insurance group rating. Insurance companies know only too well that high performance cars traditionally have a higher level of claims activity due to speed, vandalism or theft. Consequently they are keen on car security, with extra measures such as satellite tracking etc. helping high performance car drivers keep premiums down. Some are also offering discounts to owners who successfully complete advanced and high performance driving courses.