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All change for car cover
By Sarah Modlock

The cost of your car cover could be about to change as the grouping system used by insurance companies alters for the first time in 15 years. Until now, each car has been given a 'group insurance rating', rising from one to 20. Cars are rated
according to a number of factors including vehicle make, model and series, cubic engine capacity, cost to repair and performance in crash tests. The higher the group, the more relatively expensive it is likely to be to insure the vehicle.

Last month, the range of insurance groups was expanded from 50 groups. The Association of British Insurers says: ''The formula used since 1992 as the basis of the system has not kept pace with changes in vehicle technology and the ever-increasing range of vehicle types. The relative 'weightings' no longer accurately reflect relative risk levels.'

For example, insurers have traditionally looked at maximum speed and acceleration rates but the new system will be able to take modern developments into account.

In the last three years the range of new cars has risen 42% to 6,000 models. Insurers will continue to take into account other factors such as a driver's age, driving history, where the car is located and how the vehicle is used but in future, insurance will also be based on the likelihood of a car being damaged in a crash or damaging another car and the likely cost of repair.

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Weighty issue

Crucially, the weight of vehicles will be taken into account for the first time. It stands to reason that the heavier the vehicle, the greater the potential for the driver to be liable for injury or damage to third parties in a collision. This could mean insurance price hikes for 4x4s or so-called Chelsea tractors and will come as a blow to those who genuinely need 4x4s because of their work or location.

'Certain 4x4s, although sustaining little damage themselves in a collision, can inflict considerable injury/damage to others. Vehicle manufacturers are becoming ever more sophisticated in the way they segment the market, creating more and more niches,' says an ABI spokesman.

The changes are likely to hit drivers of 'super-mini, multipurpose vehicle (MPV), compact-executive and lifestyle 4x4s' as well as those who drive sporty diesels and even some mid-range hatchbacks. This could add hundreds of pounds to the typical comprehensive quote. But the Association of British Insurers said that, overall, the rises and cuts would balance out and insists that drivers of less risky vehicles will see their premiums fall.

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Going up?

Car insurance has already risen by more than 4% in the last three months of last year and the AA predicts it was already on course to go up a further 18% this year. Premiums are rising because, despite the number of accidents falling, the cost of repairs and medical bills is rising. Passengers are more likely to survive, but face crippling injuries and make hefty personal injury claims. Uninsured drivers and fraud also add to insurance bills.

Royal Bank of Scotland had been increasing premiums by 5% over the last few months of 2006 and will add a further 1% to premiums per month for the first six months of 2007. The move by RBS follows the controversial decision by Norwich Union in the autumn to increase premiums by as much as 40%. The move by these two companies alone could impact on four out 10 motorists.

Some experts say rates need to rise by as much as 10% for the insurers to make money. 'It has been well publicised in the market that the present position is unsustainable. Premium inflation has been outstripped by claims inflation for the past four years,'' says an RBS spokesperson.

There are concerns that millions of motor insurance customers will not understand the direct impact of the move by RBS unless they are familiar with their policy small print. Direct Line, Privilege, Churchill, Lloyds TSB, Prudential, Tesco, Egg, Virgin Money and Nationwide are just some of the big brands backed by RBS, and motorists must not make the mistake of jumping from one RBS-backed brand to another.

The message to motorists is to shop around. Internet quotes are generally cheaper than telephone quotes, with some companies giving discounts of between 5 and 10% for customers who buy online.

'It's important to remember that if your circumstances have not changed, you should be able to renew your policy for the same price, if not cheaper. My advice to motorists is to consider newer, smaller insurers such as esure.com and swiftcover.com,' says Richard Mason of moneysupermarket.com.

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Top tips for cheaper car insurance



Make use of your no-claims record - you should be offered a discount for consistently claim-free driving.

Make your car as secure as possible - if in doubt, ask your insurer what security or parking measures might help reduce your premium.

Reduce insured drivers on your policy - some companies let you add them free of charge but if you are paying for cover which is rarely used then cut back the named drivers.

Limit your mileage - look for policies that offer discounts if you drive fewer than the 8,000 - 12,000 miles per year average. This could knock up to around 15% off your premium.
Take a bigger excess than the standard £50 or £100. Doubling the excess can knock about 15% off the premium.
Pay your full premium - many companies charge up to 10% extra if you want to pay in instalments.
Use your age - there is a remarkable drop in premiums after your 20s. Insurance companies target the over 50s for special policies and discounted premiums. But once drivers reach 75 rates start rising sharply again.

Use your gender - female under-25s obtain premium quotes which are about 20% less than males, but the picture reverses after that, with insurers charging older female drivers slightly more than older male drivers.

Don't lie - the most common lie is to register cars outside London or the other high-rated metropolitan areas, either at parents or at fictitious addresses. Doing this automatically invalidates your insurance.

Become a valued customer - you may get a discount for insuring your home with the same insurer as your car. Likewise, two cars in the same family might be better with the same insurer than separate ones. You may also be given a loyalty bonus if you stay with a firm for several years.

Insurance shouldn't really be based on the car, it should be based on the driver's record.

Try this link to see what your car is now

gone from 20 to 42. I guess I need to try harder

Strange, I've gone from group 19 to group 49, wonder how it all works.

Mt C4 VTR+ 2.0HDi hatchback has leapt from Group 10 to Group 21, I see no available reductions for advanced or additional driver training, low accident record or the like.

Seems like another excuse to hike prices, cue more uninsured drivers who can't afford the premiums.