How is Car Insurance Calculated?

Filed in Blog by on April 15, 2017 0 Comments

It's no surprise that price comparison sites are thriving when it comes to car insurance. Insurance companies tend to think that when the 'automatic renewal' notices drop on the doormat that the vast majority of people will just continue. To a certain extent, companies are banking on people being too busy to have the time to shop around for cheaper deals, or even notice at all.

It does make sense to look for other deals, but another way of getting yourself the best deal is to understand just how car insurance is actually calculated.

Car insurance groups

Car insurance groups are what the insurance companies use to set their premiums. They have been used for almost 50 years now as a way for companies to decide which cars are the most expensive to repair and the ones that are most likely to be involved in accidents.
Each new model of car is given an insurance group rating by the ABI (Association of British Insurers). Since 2009, the ratings have been extended from 1-20 to 1-50, giving insurers more scope and meaning that different specs of the same car can potentially have different ratings. As an example, a basic Audi A3 has a rating of 18, but a sporty Audi S3 is way up the scale at 46. The higher the number, the higher your insurance premium will be.

How are car insurance groups worked out?

The Association of British Insurers works in tandem with Thatcham (repair experts) to calculate insurance group classifications. They look at how much a car sustains in a collision and how expensive repairs are. The four categories of scale that are factored in are the price and availability of parts for repairs and the performance of the vehicle. Third, the repair costs - looking at both the cost of parts and labour. Finally, the price of the car when new is taken into consideration so that the cost of a write-off settlement can be calculated.

Leave a Reply

Your email address will not be published. Required fields are marked *