When buying a new vehicle drivers may automatically expect older
models to cost less to insure. Although used cars generally come with lower
insurance rates than brand new models, there are many factors that can
affect overall insurance cost. Learning how these factors impact
your insurance rate can help you make informed decisions when purchasing your
next vehicle.
Vehicle Value Is Only One Factor
Of course, the value of a vehicle is
one of the many factors insurance providers take into consideration
when determining rates. Repair costs, safety features and technology, theft
rates, claims history and likelihood of future losses also affect your overall
insurance cost.
Low purchase price does not necessarily equal low insurance rates.
A variety of risk factors are taken into consideration when determining the
price you pay for insurance.
Repair Costs Can Be Surprisingly High
Drivers looking to own older vehicles should understand that some older model cars
use specialized parts that can be expensive to repair or replace.
Parts availability, expensive labor costs and more can all impact insurance
claims as compared to the vehicles market value.
The cost to repair a
vehicle along with parts availability is typically more important than the
age of the vehicle. An older car that has expensive repairs may cost you more
in insurance.
Safety Features Factor Into Insurance Premiums
Safer cars help prevent accidents and limit injury should an
accident occur. Older vehicles are not always equipped with the same safety
features that new models offer. Vehicles with more
safety features help decrease the likelihood of injury to
drivers and passengers which is why insurance companies may offer better
premiums on safer vehicles.
Insurance companies have the potential to reward you for driving a
vehicle with advanced safety features.
Older Vehicle Theft Rates
Older vehicles can be more attractive to thieves. Certain models
become hot attractions for theft due to the value of their parts or lack of
advanced security features. This can influence your comprehensive insurance
rate regardless of the age of your vehicle.
●
Certain makes and models are more attractive
to thieves.
●
Older vehicles may have outdated anti-theft
systems.
●
Theft rates can be increased by demand for
stolen vehicle parts.
●
Regional theft rates factor in to your overall
insurance cost.
Knowing how likely your vehicle is to be stolen can help you decide
how much you’ll pay for insurance before you buy.
Driving History Is Considered First
High-risk drivers cannot always buy a cheap used vehicle to
decrease their annual insurance rates. Traffic violations, accidents and prior
insurance claims have a greater impact on your overall insurance cost than the
make and model of your car.
To better understand how driving history impacts insurance rates,
here's a breakdown of key factors influencing premium changes.
|
Factor |
Effect on Rates |
Examples |
Notes |
|
Traffic Violations |
Increase |
Speeding, DUI |
Higher penalties for severe
violations |
|
Accident History |
Increase |
At-fault crashes |
Impacts premiums for 3-5 years |
|
Claims History |
Increase |
Frequent claims |
Suggests higher risk to insurers |
|
Safe Driving |
Decrease |
Accident-free record |
Often rewarded with discounts |
These factors illustrate why driving history plays a critical role
in determining insurance costs, overshadowing the age or model of the vehicle.
Safe drivers pay less over time than those who text and drive,
speed or drive distracted.
Model of Vehicle Matters
Similar year vehicles can see different insurance costs. Models
that are considered performance, luxury or uncommon will typically cost you
more than a basic sedan.
Shopping for insurance before you buy can help you avoid costly
surprises after you drive your new vehicle off the lot.
Annual Mileage Impacts Cost
The distance you drive annually can impact your insurance rates.
The more you drive the greater your risk of being involved in an accident.
Annual mileage is used to calculate how often you could potentially be involved
in an accident. Drivers that use their vehicle more frequently are considered
higher risk and cost more to insure than drivers that only use their vehicle
occasionally.
Your mileage can also ensure you’re getting the proper rate. Many
drivers pay for more mileage than they need because they never update this
information.
Coverage Selection Impacts Prices
The amount and type of coverage you select will impact your overall
insurance price. Some owners choose to drop optional coverages on their
vehicles after considering the value of their vehicle and their financial
ability to absorb the cost of a claim.
●
Revisit your decision to carry comprehensive
coverage.
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Consider your need for collision coverage.
●
Look at your deductible choices.
●
Do not skimp on liability coverage.
Optional coverages are there for a reason. Make sure you weigh the
risk of going without certain protections.
Location Impacts Your Rate
High traffic areas, areas with high theft rates or neighborhoods
that experience more severe weather will typically cost you more to insure.
Geographic location can impact your risk of getting into an accident and filing
a claim.
This is why the same vehicle can cost more to insure in one city
than another.
Credit Related Factors
Insurance providers in your area may take credit related
information into consideration when providing you with an insurance quote. Managing
your finances responsibly could help lower your insurance costs if your
provider considers credit during their evaluation process.
Insurance isn’t the only area where healthy financial habits can
save you money.
Compare Insurance Providers
Because each insurance provider weighs risk differently used car
owners should always compare vehicle
insurance quotes. Some providers may price certain makes and
models higher or lower than other providers.
●
When comparing prices ensure you’re getting
quotes from comparable providers.
●
Get quotes that offer similar coverage
amounts.
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Ask about discounts.
●
Check into customer service ratings.
Don’t stop shopping for insurance once you buy your vehicle.
Premiums can change and it’s smart to stay informed on the insurance market.
Maintain Your Vehicle
Keeping your vehicle maintained and running properly can go a long
way when it comes to your daily commute. Well maintained vehicles are safer to
drive and less likely to experience a breakdown that could lead to an accident.
While maintenance doesn’t hurt your insurance rates it can help you
become a more safe driver.
Shop Around With Insurance in Mind
Purchasing a vehicle should never be done by price alone. Consider
how much you’ll pay for insurance, how much it may cost to repair your vehicle
and how you’ll feel driving your vehicle before making a decision.
By researching insurance rates before you buy you can avoid
surprises and shop for a vehicle that fits your budget and your family’s needs.
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