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Car Insurance Groups Explained

New Car Insurance Groups

Beginning in January 2010, new insurance groups are being used to decide which premium will be charged for individual cars. This new grouping system of 1-50 replaced the old grouping system of 1-20. Car insurers had two years to begin introducing these new groups as the old groups were phased out. These insurance groupings determine how much it will cost to replace or repair a vehicle after a motor accident.

The research firm responsible for the new groupings is Thatcham. Thatcham is the motor insurance repair research centre that is responsible for setting the industry standard for parts estimates and time estimates for repair work on a motor vehicle. This research centre reports to the Association of British Insurers information such as security features and the ease of handling a car. They determined that the old groupings were not inclusive enough for the many different vehicles currently on the road, specifically smaller vehicles.
Thatcham compiled about 70% of the information used to set the new insurance groupings. These new groupings are based on several criteria including the following:

1. Vehicle performance
Vehicle Performance is based on the top speed the car can travel and the 0-60 mph acceleration speed.

2. Parts and Replacement Parts
The cost of parts and replacement parts that are needed based on the Thatcham Parts System.

3. New Price of a Car
The total new price of a car must be determined in case of an accident that completely destroys the car.

4. Security Features
Any security features that add value must be included as decided by the Group Rating Panel.

Once the new groups are in place, whatever cars were in previous groups will approximately double. This does not mean that premiums will double, however. If the grouping doubles, the cost of premiums should stay about the same. If the grouping is less than double, than a lower premium cost might be forthcoming. An example of this would be a smaller car that goes from an old grouping of 3 to a new grouping of 5 might have a lower premium cost. However, if it goes from a grouping of 3 to a grouping of 8, it will possibly have a higher premium cost.

The purpose of the new grouping system is to make it easier for insurance companies to determine the cost values of repair time and replacement parts, and in some instances replacement vehicles, in the event of any motor vehicle accident.

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