[Closed] Car insurance groups - What's the point?

What are the two cars worth?

Its six years newer so worth considerably more. Therefore the premium reflects the higher replacement value.

3k for the beemer, 4k for the S-Max on the documentation.... So hardly an astronomical difference. Also, the Beemer depreciated in the time I had it down to ~1k, so if it's based on write offs surely the beemer should be easier to write off (thus have more of them) due to it's value and repair costs..

As above, the ins. group will weight the policy to some extent but the value of the vehicle will weight it more.

The logic of age would imply that car insurance should get cheaper year on year, as the car depreciates... Anyone had a reduced renewal quote come through, with no other changes (such as increase in NCB)?

Car insurance groups are only really relevant for newer cars. Once a car is over 5 years old insurers recalculate their own risk models based on actual accidents they've had to cover for that model of car.

This is why often a high group large engine family car is a high group when new but cheap to insure when it's 15 years old, as in general owners of that car don't crash often as they're statically more careful and the replacement value of the car has dropped substantially. The same model of car/age with the smaller engine is often more expensive to insure as it's been subject to altering the accident statistics due to the type of drivers buying base models, eg: company car drivers.

Newer car - less likely to be involved in an accident due to safety features etc?

Simply retire and buy a beige Vauxhall Nova, your premium will go down.

ABI groups are researched by Thatcham and are to do with repairs.

The calculation for your premium takes more into account than that eg how many people are you likely to injure in your accident? Smax can seat 7 and is likely to be used as such, BMW is for 5 max and not likely to be used that way, etc etc.

Insurers are shitting themselves over the discount rate changes so are going be notching up the prices...

TL:DR insurance companies are all bastards, they make it all up.

3k for the beemer, [b]4k for the S-Max[/b] on the documentation.... So hardly an astronomical difference. Also, the [b]Beemer depreciated in the time I had it down to ~1k[/b]

So the new one is worth 400% what the old one is, and it's [i]only[/i] 10% more to insure?

keithb - Member

The logic of age would imply that car insurance should get cheaper year on year, as the car depreciates... Anyone had a reduced renewal quote come through, with no other changes

I revised my car's value down a couple of years ago at renewal and got a discount. But it's hard to know if it's happening automatically.

[i] Anyone had a reduced renewal quote come through, with no other changes[/i]

Lolz! We're talking car insurance. No matter how much others may defend them (probably work for them)(I mean:"[i]it's only 10% more to insure?[/i]" !) insurance companies aren't the good guys.

Back before cheap computing power (mid 2000's?) they had to give you a price on the risks they could easily calculate.

That meant some bloke in a suit looking at the car and thinking "sensible car, undesirable and cheap to fix = group 6" or "Vauxhall Nova GTI = group 25".

Add your postcode, age, sex into the formula and you got a premium.

Now they can crunch hundreds of variables to get a better idea of the risk and give a more individual quote, which probably relegates insurance groups to insignificance.

No matter how much others may defend them (probably work for them)(I mean:"it's only 10% more to insure?" !

I definitely don't work for an insurer! The 'only' was a bit tongue in cheek, but imagine it the other way round. "I got a new car that was worth £3000 less than my old one, and the insurer only passed on 1% of that difference to me by lowering my price by £30. It's worth 75% less than the value of the old car, I should be getting loads of money off". [i]I[/i] know it's about far more than just the value of the car, or just the insurance group, but plenty don't.

I do remember trying to get my 30% 1 year no claims discount from Churchill several years ago.

In my first year of having a car I paid something like £850, and was told I'd get a 30% discount once I'd got my first year's NCD. So I look forward to paying 'only' about £600 in year 2. The quote comes through in the month before renewal at about £800, so I phone them up to ask what happened to the 30% discount.

Churchill call centre person: "Yes, that's right, you get a 30% discount now"

Me: "Really? Because I'd have expected the price to be just under £600"

C: "No, it doesn't work like that, the base price might have changed if there have been lots of crashes or thefts in your area, for example. So the 30% will be off this years price"

Me: "Okay, I understand that, it just seems like a big jump"

C : "Yep, that's just the way it is. So can I continue with the renewal?"

Me: "Can you give me a quote with zero NCB first please?"

C: "Certainly" ...tap tap tap...."That's come out at £850"

Me: "Right, so 30% off that should be my renewal price for this year?"

C: "Yes"

Me: "So £600?"

C: "30% off £850"

Me: "which is £600, right?"

C: "You get a 30% discount, and the renewal quote is £800"

Me: "But 30% of £850 is about £250, so the quote should be £600"

C: "No, you've got the 30% off and it's £800"

Me: "So you're telling me £50 is 30% of £850?"

C: "Yes, that must be right because you get a 30% discount"

Me: "But that's not 30%"

C: "It is, because you get a 30% discount"

This continued for some time. I tried explaining that there were more than 4 lots of £50 in £850 and therefore it must be less than 25% but he wouldn't believe me. It was like teaching junior school maths, but the kids have got computers that contradict what you're saying!

So in summary, there is no point in insurance groups for the second hand market...

So basically, you have to do a dozen comparison quotes to find out which car is meets the "not outrageous insurance" criteria of any buying decision, for which (according to a radio four investigation) raises your premium as doing lots of comparison searches apparently demonstrates you are a higher risk customer..

It is strange how the calculations come out. I recently changed my car from a nearly five year old diesel estate to a two year old petrol hatch. The new car has almost double the power, is worth almost twice as much yet the increase was about 15% for the year. Apparently it has some advanced safety features that help lower the insurance group. I was happy to be honest.

The replacement cost of a car has little to do with the premium. Its the squishy things in the car that get injured or worse in crashes that cost the money come a claim and it is that risk of injury or death that drives the cost.

A cheap banger worth £200 can still cost an insurer £££££. The change to the Ogden formula regarding the discount rate has just compounded this by a significant factor.

Re insurance groups there's more to underwriting a premium than this. Say you're an underwriter and your looking at premiums. A particular group 15 car had been involved in 2000 claims (not the same car obvs - your entire pool of such cars you're insuring) costing you £1m and a particular group 25 car has been involved in 1500 claims costing you £750k. Which car would you charge more money to insure?

Case in point - my Civic Type R is around £250 cheaper to insure than Mrs Danny's Citroen C4 1.6 hdi.

Don't forget the actuarial data available to car insurers is vast and factors in somewhere between 50 and 100 different aspects of the risk.

A particular group 15 car had been involved in 2000 claims costing you £1m and a particular group 25 car has been involved in 1500 claims costing you £750k. Which car would you charge more money to insure?

I'm not sure that's very clear. Doesn't it depend on how many of each car is on the road?

You can normalise the data of you want but if you have 1000 of one type of car that's costing you money you may want to reduce your exposure by pricing them off the books.

Equally you could average the data out to find the cost per vehicle but the basic point that a pool of group 15 cars could be costing you more than a pool of group 20 cars of the same size remains.