A LITTLE-KNOWN code could be the key to unlocking cheaper car insurance.
The average cost of motor insurance has fallen in recent months – from £621 in the final quarter of 2024 to £589 between January and March, according to the Association of British Insurers (ABI).
But it always pays to cut costs where possible, starting with the model you choose.
You may not have heard of the car insurance grouping system which places vehicles in certain cohorts and gives you an indication of what you’re likely to pay for your premium.
But how exactly does the system work, and how does your car insurance group affect what you pay?
Here’s what you need to know.
What are car insurance groups?
The car insurance grouping system was established by the ABI, which represents insurers, and Lloyds Market Association (LMA).
These two bodies meet regularly to decide which insurance groups car and vans should be put into.
The system is used by insurers to assess the risks associated with insuring a vehicle.
Every time a new car gets a rating, it’s added to the Group Rating System, managed by Thatcham Research.
Car insurance groups are determined by a number of factors, including a new car’s value (the showroom price) and the cost of replacement parts.
How long it might take a mechanic to repair a vehicle after a crash and the type of brakes it uses are also used to decide what group it goes in.
Rhydian Jones, motoring expert at Confused.com, explained: “What group your car sits in depends on things like its value, security and safety features, top speed and acceleration, and potential repair costs.
“Higher value cars with higher speeds, which are generally more costly to repair would be considered ‘riskier’ than others, and would therefore be in a higher insurance group.
“Equally, those with anti-theft features, or more advanced safety features imply they’re less likely to be involved in an incident, or stolen, which would put them in a lower insurance band.”
How groups affect what you pay and how to check what you pay
The car insurance grouping system sees vehicles assigned a number from 1-50.
Motors in the lower groups are the cheapest to insure while those in group 50 are the most expensive.
According to insurer Allianz, a lower end Citroen C1 or a higher end Fiat 500 will likely be in groups 1-10.
What is car insurance?
Consumer reporter Sam Walker talks you through what car insurance is and what it covers you for…
Car insurance pays out if your vehicle is stolen, damaged, catches on fire or is involved in an accident.
As a minimum, it protects you against any damage you case to other road users, the public or their property – these are called third parties.
You only need to claim on your car insurance when an accident is your fault.
If another motorist is to blame, their insurance should pay out instead.
Car insurance, unlike home insurance, is a legal requirement and if you don’t have it you can be fined up to £1,000.
You can also have your vehicle seized and destroyed.
However, you don’t need to insure your car if it is classed as “off-road”, or holds a statutory off road notification (SORN).
The vehicle has to be kept on private land and not a public highway though.
A lower end Land Rover Discovery or higher end Porsche Boxster will be in groups 41 to 50.
Of course, how much you’ll pay for your car insurance is also dependent on other factors like your age, where you live and your estimated mileage.
However, numbers crunched by comparison website MoneySupermarket show you could end up paying £640 more per year based on what group the vehicle is in.
The figures below are based on policyholders who:
are aged between 30 and 39 have no penalty points have held a licence for one year or more have a vehicle with just one person insured on it have an estimated mileage of 5,001 to 10,000 miles have no modifications on their vehicle use their vehicle for socialising and commutingLetters (suffixes) are also assigned alongside a vehicle’s car insurance group number which tell insurers about a vehicle’s level of security.
The better level of security, the lower your insurance premium is likely to be. These are the suffixes and what they mean:
A: Acceptable and meets the standard requirement for the car insurance group
D: Doesn’t meet requirements for the group, meaning the car has been placed in a higher group than normal
E: Exceeds requirements for the group, meaning it’s been placed in a lower group than normal
P: Provisional, meaning not enough data was available when the car went on sale to rate the car’s security level
U: Unacceptable, meaning the car falls below security requirements and insurers may require an upgrade to security features before insuring it
G: Grey import, meaning the car has been imported and will require extra checks to ensure it’s legally okay to drive on roads
There are a number of free-to-use tools where you can find what car insurance group a vehicle fits into, such as MoneySupermarket or Confused.com.
Major change from early 2027
Thatcham Research is in the process of rolling out a new car insurance rating system, known as the Vehicle Risk Rating (VRR) system.
It officially launched in September 2024 and applies to all vehicles registered after August 1, 2024.
However, if you have a car registered before August 1, 2024, it will keep its old Group Rating.
Meanwhile, both the Group Rating (1-50 scale) and new VRR scores are currently being provided to insurers, while only the Group Rating system can be seen by motorists online.
Thatcham Research says the new VRR system will be the only rating system used for both insurers and motorists from early 2027.
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