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Does the value of your car affect your insurance?

Vanessa Tsai
Written by  Vanessa Tsai
Saarrah Mussa
Reviewed by  Saarrah Mussa
5 min read
Updated: 14 Feb 2024

When working out the cost of your policy, insurance providers consider many factors – including the value of your car.

When getting a quote for car insurance, you’ll be asked to enter a car valuation figure. If you’re wondering how the value of your car affects the price of your insurance, read on.

How does car value affect insurance costs?

When insurance providers calculate the cost of your policy, they’ll consider the value of your car.

In general, the more valuable your car, the more you’ll pay for insurance. With pricier cars, the parts are usually more expensive to repair or replace. Valuable cars are also at a higher risk of being stolen or vandalised, as they’re more likely to attract the attention of criminals.

Two sports cars

What other factors affect insurance costs?

The value of your car isn’t the only thing that affects your insurance costs. Plenty of other factors affect your insurance premiums, including:

  • Your age

  • Your job

  • Your driving record

  • Expected annual mileage

  • Where you live

  • Where you park your car

  • How long you’ve been driving

  • Type of car

  • Any no-claims discount

Wondering why your car insurance premiums are so high? Our guide goes through it in more detail.

How do you work out the value of your car?

You can work out the value of your car by visiting a car valuation website. Just enter your car’s registration number to get a valuation.

Alternatively, you could carry out some online research by visiting websites like Autotrader and eBay, where you can search for your car and see how much similar models are selling for.

How do insurance companies decide on the value of your car?

Although you would’ve declared the price of your car on your insurance policy, insurers don’t base their valuations on that figure.

Instead, if your car is written off, your insurer will take into account depreciation and pay out the current market value of your car. That’s the value of your car if you were to sell it today.

Does vehicle value affect what insurance group your car is in?

Yes – your car’s value affects which insurance group it’s in.

The Association of British Insurers (ABI) has a Group Rating system, which categorises every make and model of car into an insurance group between 1 and 50. This rating system groups cars based on a variety of factors, including: price when new, repair costs, performance, safety and security features, and price of replacement parts, as well as the relative risk of each car.

When insurers calculate the cost of your policy, they’ll usually take your car’s insurance group rating into account. A general rule of thumb is that the higher the insurance group, the more expensive it’ll cost to insure.

If you want to find out which insurance group your car is in, enter your car registration number into our insurance group checker.

Will switching to a more expensive car affect your premiums?

Yes – high-end, higher-powered cars will cost more to insure. That’s because they’re more expensive to repair and replace.

You can ask your insurer to transfer your current policy to the new car. If the new car is more expensive and in a higher insurance group, your premiums will likely go up. As a result, you’ll need to pay more.

Nevertheless, if you switch to a new car mid-policy, you don’t have to stick with your current insurer. You’re free to compare policies and find a deal that suits you better – but bear in mind any cancellation fees you may need to pay.

What is gap insurance?

Guaranteed Asset Protection (GAP) insurance covers the difference between the original price you paid for your car and the current market value your insurer is willing to pay.

It acts as a safety net if your car is stolen or written off and your insurance provider pays out less than what you initially paid for the car.

It’s available as an optional extra when you buy car insurance.

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