Does the value of my car affect my insurance? |

A simples guide

How does the value of my car affect my car insurance premium?

Calculating your car insurance premium isn’t a simple matter. As well as taking into account the type of vehicle, insurance providers will look at a host of other factors including your age, address and driving history.

Vehicle value is another component of your car insurance calculation. How much of a role it plays will depend on you, your car and your choice of insurance provider.

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Does vehicle value matter then?

Different factors have different impacts depending on the individual. For example, a young driver's premium is likely to be affected more by the statistical risks associated with their age than by the value of their car.

Older drivers may see more of an influence from vehicle value as there could be fewer risks for underwriters to consider. They’re also more likely to have the means to be insuring a more valuable car too.


car value for insurance

Vehicle value and insurance groups

If saving money on your car insurance is important to you, you may want to pay attention to what insurance group your car is in. Car insurance groups are set by the insurance industry and attach a number between 1 and 50 to each car.

An insurance group 1 is generally cheaper to insure, while 50 is the most expensive.

In setting insurance groups, the following are taken into account:

  1. New car values
  2. Damage and parts cost
  3. Repair costs and times
  4. Parts prices
  5. Car performance
  6. Safety features
  7. Security features

As you can see car value is an important component of what makes up a car insurance group, but it might not be the most important. According to the Association of British Insurers, the cost of car repairs accounts for over half of all the money paid out in motor insurance claims. Therefore, we can probably assume that repair costs feature strongly in how the groups are defined!

Considerations on higher value cars

For very expensive cars, your insurance provider will often insist on additional security features over and above the manufacturer’s minimum. You can also face an additional or increased excess. This will vary by insurance provider so it’s worth shopping around if you run into difficulties.

Considerations on cheaper cars

Don’t assume that because your car was cheap to buy or not worth much, that it will be cheap to insure. This is because of the other risks associated with cheaper cars, such as the difficulty of obtaining older parts, general wear and tear and the higher risk of a vehicle failure leading to an accident.


Do I need to enter a valuation?

All insurers will ask you to estimate the value of your car. Be as honest as you can here or you’ll be kidding yourself. If you inflate the value, you might pay more but be aware, you won’t get back more if you write it off – your insurance provider will pay out a market value for your car.

If you undercook the estimate and your car is written off you won’t get back its true value. Worse, your insurance provider may find that you dishonestly obtained the insurance and deem it that you’ve invalidated your insurance.

So, while car value is a component of your car insurance calculation, it’s not necessarily the most important. Comparing insurance prices is simple. Why not put in your details along with those of the car here and see what you could save?

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