You're not insuring just the vehicle, but the inherent risk in using it. The value of the vehicle plays a very small role in the underwritten risk. The "inherent" risk is in you causing injury or loss to others. The easiest way to understand this is to look at the cover for third party liability, should you permanently disable someone in your vehicle, your insurer may well provide up to £20 million of cover. It doesn't matter if you have a ten year old car, or a new car, the loss incurred through your negligence is the same. The proportional risk of the vehicle itself is about 10 - 20 per cent of your premium, the larger part of the premium being for third party claims. For example - when your car was new, it probably cost not far of what you pay now to insure it. The vehicle has not changed, and neither has the underwritten risk that is attached to it, i.e. the insurance group rating.