Driving a new car will not necessarily cost more to insurance, nor will driving a used car automatically cut your car insurance premiums. There are several reasons for this interesting state of affairs, and they are part of the methodology that insurance companies use to set car insurance rates.
The age of the car is only one of several factors that insurers consider when they set rates. The main factor that affects car insurance rates is the driver. The first thing an insurer looks at is you and not your car because the driver is the biggest potential risk factor. Your driving record is the main determinant for insurance rates. If you get a lot of tickets and have several accidents on your record you will pay higher insurance premiums no matter what you drive.
After your driving record these other factors can affect your rates:
The age of the car is only one of several factors that insurers consider when they set rates. The main factor that affects car insurance rates is the driver. The first thing an insurer looks at is you and not your car because the driver is the biggest potential risk factor. Your driving record is the main determinant for insurance rates. If you get a lot of tickets and have several accidents on your record you will pay higher insurance premiums no matter what you drive.
After your driving record these other factors can affect your rates:
- Your age. Younger people usually pay a higher rate.
- Your sex. Men usually pay a higher rate because they’re considered riskier drivers.
- Your geographic location. Rates vary widely from city to city and state to state. The laws in some states such as Michigan can greatly increase premiums.
- Vehicle make and model. Some vehicles have higher rates of theft so they will cost more to insure.
- Value of the vehicle. The more it costs the more it will cost to insure. A used Rolls Royce will cost more to insure than a brand new Honda Civic.
- The car’s safety features. Insurers charge less for cars with certain safety devices.
Why Newer Cars Might Cost Less to Insure
Newer cars may cost less to insure. The reason for this is that the biggest claims arising from car accidents are injury claims for medical injuries and pain and suffering caused by wrecks. The safety devices and features in modern cars significantly reduce the chance of injuries. That means insurers pay out less so they want to encourage the use of such devices. For example, insurers encourage the use of airbags, which reduce head injuries.
All insurers now offer discounts for newer vehicles that are loaded with safety features. This includes warning systems and protection in accidents. Some insurers also offer discounts for those who buy cars with top safety ratings. Insurers will also give discounts for antitheft devices including so-called tracking technology.
Finally, insurers may charge more if an older car is rare and has hard to find or replace parts. Many insurers will charge more for a collector’s car if it is not covered by a separate collector’s car insurance policy. This means you won’t automatically get lower insurance premiums by driving a used car. Yet there are some ways to save money driving a used car. One is to cancel your collision insurance, which covers the cost of repairs to the vehicle from certain accidents. That can save you money but be warned, you’ll have to cover the cost of repairing or replacing the car out of your own pocket.
Newer cars may cost less to insure. The reason for this is that the biggest claims arising from car accidents are injury claims for medical injuries and pain and suffering caused by wrecks. The safety devices and features in modern cars significantly reduce the chance of injuries. That means insurers pay out less so they want to encourage the use of such devices. For example, insurers encourage the use of airbags, which reduce head injuries.
All insurers now offer discounts for newer vehicles that are loaded with safety features. This includes warning systems and protection in accidents. Some insurers also offer discounts for those who buy cars with top safety ratings. Insurers will also give discounts for antitheft devices including so-called tracking technology.
Finally, insurers may charge more if an older car is rare and has hard to find or replace parts. Many insurers will charge more for a collector’s car if it is not covered by a separate collector’s car insurance policy. This means you won’t automatically get lower insurance premiums by driving a used car. Yet there are some ways to save money driving a used car. One is to cancel your collision insurance, which covers the cost of repairs to the vehicle from certain accidents. That can save you money but be warned, you’ll have to cover the cost of repairing or replacing the car out of your own pocket.
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