Car insurance is about to change big time! Starting August 1, 2024, new cars will no longer use the traditional insurance group ratings. Instead, they’ll be evaluated using a new Vehicle Risk Rating (VRR) system.
Here’s how it works: the VRR looks at five key areas of each car to give it specific scores for performance, damageability, repairability, safety, and security. This new approach comes from Thatcham Research, a firm backed by insurers, which calls it “a more comprehensive and dynamic framework for evaluating vehicle risks.”
What’s different?
Unlike the old system, which only sets a car’s rating at its launch, the VRR can change over time, which means your insurance costs could go up or down as the car’s rating fluctuates.
The old rating system assigned cars a score between 1 and 50 to roughly estimate insurance costs, but this will only apply to cars registered before the new system kicks in.
Jonathan Hewett, CEO of Thatcham Research, notes “New technology is challenging the existing motor insurance model, prompting an unprecedented shift in the balance of risk from the driver to the vehicle,”
“In response, we’ve worked closely with insurance, drawing upon cutting-edge data analysis to create a rating system that offers a more precise and detailed assessment of vehicle risks. This will not only help insurance price premiums more accurately but also encourage manufacturers to consider insurance outcomes when designing vehicles.”
The VRR aims to give buyers better insight into insurance costs, too. Each of the five categories will get a score from 1 to 99, covering:
- Performance: Looks at speed, acceleration, and the effects of modern engines.
- Damageability: Assesses how design and materials impact repair costs and damage severity.
- Repairability: Focuses on how easy and cost-effective it is to repair the car, promoting designs that are easier to fix.
- Safety: Examines active and passive safety features, like crash avoidance.
- Security: Reviews both physical and digital security measures, leveraging Thatcham’s expertise in vehicle security.
The repairability category is crucial since it heavily influences the overall VRR score. With repair costs up 28% from last year, it’s clear why this matters. Thatcham also pointed out that electric vehicles are “approximately 25% more expensive to repair than their petrol equivalents and take 14% longer to fix”.
The new VRR system is launching this week, but it will run alongside the old Group Rating system for 18 months to help insurers and manufacturers adapt. After that, the VRR will be the go-to system for all new cars.
