The Cost of Insuring Your Used Car

Car insurance can be baffling. Buy a car similar to the one just traded in and it would seem reasonable to assume the insurance cost would more or less stay the same. After all, one family estate car is pretty much like another, is it not?

Well, not necessarily in insurance terms. Premiums can rocket, leaving the car owner scratching his head and wondering why, especially if he has not made a claim on his insurance from more than five years. So those concerned about the cost of motor insurance should check their car falls into a low insurance group before making the purchase.

A change of car does not affect all the criteria used to calculate car insurance. The newly-acquired used car will probably be kept at the same address and parked in the same place, be it a garage, driveway or on a public road. What has a greater bearing on the price is which insurance group the car falls into.

Range of Insurance Groups

Insurance groups range from group one (the lowest) to group 20 (the highest) and most family cars fall between groups six and 12. Sports cars, high-risk cars and cars with high-powered engines will be rated in higher groups. The lower the group rating is, the lower the insurance premium will be.

The group ratings for cars are decided by the Insurance Group Rating Panel, which is made up of members from the Association of British Insurers’ and Lloyds Market Association and are based on research by the Motor Insurance Repair Research Centre - Thatcham. These ratings are only for guidance and insurers are not obliged to follow them. However, most insurers will take them into account along with own records when determining insurance premiums.

Almost three quarters of all the money paid out in motor insurance claims goes towards repairing cars. It makes sense, therefore, that the cost of spare parts and the time taken to make repairs are key factors when calculating motor insurance premiums. The factors used to determine group ratings include:

• The cost of the car when new.
• The performance of the car in terms of top speed, acceleration and image. Claim statistics tell Insurers that high-performance cars will often mean more frequent insurance claims.
• Security features such as alarm and immobilisation systems, high security door locks, glass etching, locking devices for alloy wheels, coded audio equipment and visible VIN numbers. If fitted as standard equipment by manufacturers, these can help to reduce insurance premiums.
• Damage and parts costs. Insurance companies look at the likely extent of damage to each car and the cost of the parts needed to repair it. The lower these costs, the lower the group rating.
• Repair times, as longer repair times mean higher costs. This expense will be passed onto the customer in the form of a higher group rating.
• The availability of body shells – the basic frame of the car. These are essential for certain repairs after accidental damage and so are taken into account in group ratings.

Understanding how the group ratings work gives consumers the power to make an informed decision when buying a car, knowing what the ongoing cost of motor insurance will be.