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How Do Car Insurance Groups Work?

stack of different types dummy cars - insurance rates on car groups

When budgeting for a new car it’s imperative to include the cost of insurance. The car is a one-time expense, but you are going to pay premiums for as long as you will drive it.

New cars are assigned a so-called insurance group, from 1 to 20, based on how much risk the car poses for the insurer. The lower the group category is, the less you should pay for insurance. The ratings are based on the following factors:

  • Acquisition price. The more expensive the car is, the higher the group number will be.
  • Overall performance. Low top speeds and high 0-60mph times lead to low ratings.
  • Average repair costs. Testing companies evaluate damages at a low speed (10mph) and the insurer will assess the prices of the parts that need to be replaced and the corresponding labor costs.
  • The availability of the parts. Exotic models, especially ones that aren’t manufactured in the US, may be cheap, but parts are hard to find, which leads to longer waiting times in the repair shop and higher costs.

Security ratings also contribute to cars being placed in certain insurance groups. Insurance groups take security features into account. Standardized terms are used to assess how secure a car is:

  • E: exceeds the recommended features for a car of its class. A car rated E may have its rating group reduced, so an E car in group 9 can be listed as 8E.
  • A: acceptable features. Most new cars you will find these days are labeled “A”.
  • D: doesn’t meet requirements. A D car’s group can be increased, so a group 9 “D”-car can become 10D. If the owner chooses to upgrade the security features then the car may remain in group 9.
  • U: unacceptable. The car doesn’t meet the minimum requirements and most insurers won’t cover it. Some may offer to insure it if you upgrade the security features yourself.
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