My current dream automobile is a Mini Cooper (well, realistically, my real dream car would probably be a 1930s Packard or something similar). However, I’ve only ever drove reasonable types of vehicles, typically pre-owned four-door sedans and station wagons.
I didn’t consider how the type of automobile I chose may affect my insurance rate when I most recently went car shopping. I simply thought it would increase with a newer vehicle (unless I decided to get the historic vehicle, of course), and I knew I wouldn’t be purchasing anything expensive or high-end. In the end, my premium didn’t increase enough to significantly affect my entire budget; I just wanted to drive a safe, dependable car that I could afford.
It’s just me, though. Consider how your insurance rate will impact the overall cost of owning your car if you have your heart set on a particular vehicle or the means and desire for a luxury vehicle.
Car insurance firms hire statisticians known as actuaries to calculate that rate because several factors go into it. Although the exact formula used by each business is private, we do know that statistics gathered about the sort of automobile you drive play a significant role in determining how much you’ll spend.
Before you assume that your desire for a brand-new, flashy red sports car will guarantee you exorbitant insurance rates, take into account the fact that an older, more “boring” vehicle may also be expensive to insure. Continue reading to learn why.
Big and new versus small and outdated
For a number of reasons, insurance for less spectacular vehicles may be more expensive. The top three most stolen cars in the United States in 2010 were mid-priced sedans from the early 1990s, according to the National Insurance Crime Bureau [source: CNN Money]. For instance, a 1995 Honda Civic is simpler to steal because it’s less likely to have a car alarm, and there is a sizable aftermarket for the parts. The United States is not the only country to experience this problem. The Ford Transit, a panel van that seems appealing to thieves due to the simplicity of selling its spare parts and its value as scrap metal, was the most stolen vehicle in the United Kingdom in 2011.
Young drivers are more likely to be involved in accidents than more experienced drivers, hence older, more dependable cars are frequently chosen as their first vehicle. Due to the accident risk, vehicles that appeal to younger drivers may wind up costing you almost as much in insurance premiums as a sports car. Popularity definitely has an impact.
But does this all imply that someone driving an often stolen older vehicle will pay a greater insurance rate than if he purchased a brand-new Cadillac Escalade? Most likely not. One of the most stolen new model year cars is still the Escalade. It is a high-profile luxury car in addition to being big and expensive. If you have an accident while driving a luxury automobile, it will cost you more money to repair and replace it — and this is especially true if it has a lot of expensive, high-end features.
Therefore, both a quick automobile and an expensive car will likely increase your insurance rate. An Escalade costs more money than a tiny two-seat roadster like the Mazda Miata. It is light, tiny, and readily maneuverable, and it is made primarily for speed. There are also several ways to enhance it to go even faster. According to statistics, if you drive a sports car, you’re more likely to speed. and receive citations for speeding. Likewise, drive carelessly. and suffer mishaps. Yes, this will result in higher insurance costs.
Blind to color
For whatever reason, many people believe that red cars have more expensive insurance. Both of these beliefs are untrue, although they are likely related to the idea that drivers of red automobiles tend to receive more speeding penalties. The color of your car is not one of the numerous aspects that affect insurance premiums, despite the fact that there are many.
Speed and Size
Your insurance rate may be affected by more than just the manufacturer and model of the car; it may also be affected by what’s inside the engine. Returning to my favorite Mini Cooper, Different trim levels (or option packages), ranging from a 121-horsepower engine to a turbocharged, 208-horsepower engine, would be available to me if I decided to purchase a new hardtop Cooper.
A larger, more potent engine increases the likelihood that you will test it out by driving quickly, and you know the routine. That includes modifying vehicles to improve their performance as well; if you purchase a Honda Civic that has been tuned, your insurance premiums will be higher than those for the normal model.
There is a difference in size. Even while a large SUV won’t move as quickly as a little sports vehicle, it will cause more harm if it collides with a person. However, despite the sneers directed at minivans from some quarters (I’m looking at you, soccer moms), these vehicles typically have lower insurance rates. They also have generally positive safety ratings. Actuaries consider the results of crash tests, so if your automobile performed poorly for its model year, it will result in a higher rate. An older vehicle might not have safety features like side-impact air bags, even though it may be more expensive based only on its retail value. Another difficult dichotomy to think about
What can you do given that insurance firms don’t disclose the precise formulas they use to determine rates? your analysis. Investigate your dream car’s crash test safety scores to see if thieves also have a strong desire for it. You can run potential cars by your insurance carrier to receive a price if you’re thinking about buying (or leasing, which can be more expensive because the company leasing it to you determines the coverage, not you). In this manner, you won’t get a surprise after purchasing the car!