How Does Your Car Insurance Company Classify Your Ride?

15 january 2013

Car insurance companies determine your insurance rates based on several factors. One of the main factors is what kind of car you drive. In the UK, a Group Rating Panel reviews each type of car and provides a suggested risk factor for each model. Insurers can use these group ratings to help establish standard premiums for the cars based on the criteria that the Rating Panel uses.

Cost of Repairs

The more expensive a car is to repair, the more the insurance company will have to pay after an accident. Cars that have expensive parts or engines that require specialty tools to maintain and repair will cost more to insure than cars that are less expensive.

Availability of Parts

The cost of labor can often be far more expensive than the cost of the parts. Cars that require foreign parts can take longer to repair than those with domestic parts, so they are more expensive to insure. Non-standard vehicles that require specialty parts are also more expensive to insure because the parts usually need to be shipped in for repairs.

Safety Ratings

One of the most significant elements of the insurance ratings involves a car’s safety. Safer cars lead to less serious injuries after an accident, which saves the insurance company money. Cars that are equipped with modern safety features such as anti-lock brakes and airbags will cost less to insure. Protecting a car from theft is another way to avoid paying more for car insurance. Cars with built in anti-theft devices tend to be rated better than those without anti-theft devices.

Overall Value of the Car

A car’s initial rating depends on the car’s overall value. Brand new cars will cost more to insure because the insurance company needs to cover the full value of the vehicle. As a car gets older, the value decreases and the insurance premiums tend to decrease. Cars that are more expensive will cost more to insure no matter how old they are.

Engine Size and Performance

Cars that have engines that are more powerful cost more to insure because of the potential damage they can cause in an accident. A car with a smaller engine is more likely to be driven cautiously than one with a larger engine. High performance engines tend to be driven at higher speeds, which can cause accidents to be more serious. Cars that are equipped with high performance engines are also more enticing to car thieves, so they generally have a higher rate of theft that helps raise the cost of insuring them.