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How car insurance groups affect you

You may or may not know exactly what car insurance groups are. If you do not know, then you most likely are not aware of how they can affect you. However, car insurance groups probably will have an indirect affect on you if you own or drive a car. This affect is due to the fact that every car owner or driver must have motor car insurance. The cost of each driver's insurance often depends on which insurance groups the driver and the vehicle are placed in.

Insurance groups and rating systems

Every insurer uses some type of rating system to assess the risks that is being assumed by issuing insurance cover. These rating systems often contain some form of classification system. The classification system sets up various insurance groups for every person or object being insured based on similarities and common characteristics. Each group is then given a specific numerical code that identifies the risk level from an insurer's viewpoint. Just as each driver is placed into a specific insurance group, each passenger vehicle is placed into a car insurance group as it comes out on the market.

This is done by a panel made up of members of the Association of British Insurers and Lloyds Market Association. The panel considers many factors when determining a vehicle's risk level. Since nearly three quarters of the cost of insurance claims is repairing vehicles, the panel considers criteria that reflect these expenses. The panel considers factors such as:


? Likely extent of damage and cost of labour and replacement parts, including the various paint finishes and availability of body shells/frames

? Likely amount of time that will be involved in making repairs

? The cost of replacing the entire vehicle

? The vehicle's engine size, weight, and performance, especially acceleration and top speed capabilities.

? The vehicle's security and built-in safety features, such as air bags, seat belts, door locks, alarm/immobilisation systems, coded audio equipment, visible Vehicle Identification Numbers, and glass etching.

Thatcham Motor Insurance Repair Research Centre tests each vehicle and provides approximately 70% of the information that the panel bases its decisions on. Up until 2007, the vehicles were placed in one of twenty possible car insurance groups. However, there are now currently fifty groups. According to Thatcham, the expanded number of groups permits the insurers to set more accurate premiums. The lower the car insurance group number is, the lower the risk is considered to be.

The vehicles are also issued a letter code that designates its level of security risks. The letters are:

? A- Acceptable security

? D- Didn't meet security requirements for the car type, so the group has been increased. It doesn't fit the requirements for a lower group that the car type may usually be placed in, so it was placed in the next higher group number

? E-Exceeds the requirements for the normal group for the car type, so it was placed in a lower group number

? P-Provisional rating due to incomplete data on the model of car

? U- Unacceptable due to security being significantly lower than the standard.

Lowering premiums

Understanding the way insurance groups' risk levels are calculated may help you to lower your insurance costs. This is especially true for motor car insurance cover. Unfortunately, it's not easy to change your gender or age classification. However, you can balance these and other potentially negative factors out.

For instance, if you know your gender or age places you in a high risk group, then drive a vehicle in a low risk group. If you know your car insurance group has a high number, then try to choose a low risk occupation or residence. Sometimes merely changing the colour of you vehicle will lower your premium. Lowering the amount of mileage if you drive a high performance car may also help. You can also change various aspects of your lifestyle to help change which insurance group you are placed in, such as stop smoking. Since insurers aren't required to follow the advisory group ratings for vehicles, you may also be able to lower your premiums by shopping around.

Other benefits

Knowing how car insurance groups are determined may have other benefits besides lowering your premiums. The car insurance group can also indicate the future cost and types of repairs you may encounter while owning a particular vehicle. The lower the numerical code is, then the less expensive the replacement parts probably are. Comprehending the way insurance group risks are calculated may help you to better budget your finances. They may also help you make better lifestyle choices.

How to check car's rating

Numerous websites have made it easy to find out what a vehicle's car insurance group and security rating is. However, you must use caution and determine if the group given is based on the older 1-20 rating or the new 1-50 rating. Some makes and models with a higher number on the newer group rating system will be less risky than those with lower numbers on the old system. The best site to use is the Thatcham website, because it will give you both the old and new group rating. The Association of British Insurer website may also be very helpful to you. Your own insurance agent or broker may also be able to suggest some insurers that offer reasonable premiums for your specific car insurance group.

 

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