Are Newer Cars Always More Expensive To Insure?
If you are thinking about buying a new car but are concerned that your insurance costs will go up, you may be right. On the other hand, some newer cars are actually less expensive to insure than some older cars. How can this be? Due to the magic of risk and cost analysis, insurance companies figure out how much money they will have to pay in any given situation and adjust their rates accordingly. Here are some factors that may skew a new car’s insurance rates downward while adjusting older car insurance rates upward.
Newer Cars Have Better Safety Features
Newer cars may actually have lower insurance rates despite their higher price tags because they reduce the likelihood that you will be injured in a crash. When determining liability rates for new vehicles, insurance companies look at several factors, including the National Highway Transportation Safety Administration’s crash test rating for the vehicle. The NHTSA rates new cars for rollover roof strength as well as side-, front- and rear-impact strength. The higher the scores on these factors, the less likely drivers and passengers will be injured.
Another reason new cars may carry lower insurance price tags is that new technology may actually help drivers avoid an accident in the first place. Many cars now have backup cameras that allow drivers to avoid children or objects behind their vehicles as they back up that former may have been difficult to see. Furthermore, many cars now have features such as alarms that sound if a driver departs from a lane or gets too close to another vehicle.
When drivers and passengers are involved in an accident, it is also less likely that they will be seriously injured thanks to innovations such as airbags, safety restraints and crumple zones on vehicles. All of these new safety items have combined to cause death and injury rates from car accidents to decline steeply in the past two decades and have ultimately lowered overall insurance costs.
Newer Cars May Cost Less To Repair
While many individual parts of cars are more expensive to repair than in the past, overall car repairs may be simpler and less costly. This is because cars are now structured with “crumple zones,” areas where the damage will be concentrated in a single area from an impact. This means that after a crash, instead of the entire frame of the vehicle being bent out of shape, only one isolated part of the car may be affected and can easily be fixed by replacing the bumper, door or panel.
Of course, this is not always the case. In some cases, newer cars cost more to repair, especially if they feature expensive windshield glass or hard-to-replace parts that require intensive labor.
Comprehensive coverage prices may also hinge on how often a particular type of car is stolen and how much it will cost to replace the vehicle. In some cases, repairing or replacing a vehicle may cost more for an older car than a newer one.
How Do Car Insurance Companies Determine Prices for Coverage?
Ultimately, whether a new car costs more or less to insure than an older car will depend on an evaluation of three factors:
1) The overall cost to repair the vehicle in the event of a crash. If the vehicle has expensive parts and requires a great deal of labor to perform simple repairs, the cost of insurance will be higher than for a vehicle with cheaper parts that is easier to fix. This will be true regardless of the age of the vehicle; some older vehicles are worth more than a brand-new car if they are considered “luxury” or “sport” models.
2) The safety features of the vehicle that may prevent an accident. If a car is considered extremely safe and features a great deal of both passenger safety and crash avoidance technology, that car will likely cost less to insure than another model, regardless of age.
3) The historical profile of the vehicle type. Because SUVs have high rollover rates and sports cars offer faster engine speeds, these types of cars may cost more to insure than sedans, even if the sedan is newer than the SUV or sports car.
While age is often a factor in determining car insurance rates, it is not as important as the safety rating of a vehicle, its engine size and type and the relative cost to repair the vehicle in the event of a crash or to replace it in the event of a theft.
The only way to be sure that you are getting the best price for your vehicle insurance, regardless of the age of your car, is to compare prices of insurance among different companies.