Updated: Jun 28, 2021
Every car owner needs car insurance. However, the rate that people pay for their auto insurance policies (their “premium”) varies drastically. Why are some vehicles more expensive to insure than others?
There are many different factors that affect the cost of insuring a particular vehicle. Most of the factors relate to the likelihood that the vehicle will get into an accident, but there are other important factors as well.
Much of the data affecting rate calculation relates to each specific vehicle’s safety, performance, and need for repairs over time. Certified databases, such as the Highway Loss Data Institute database, collect data on how much insurers have paid out on claims relating to crashes, defects, repairs, injuries, and vehicle theft. Based on these statistics, vehicle models with higher rates of those factors are more expensive to insure. Expensive luxury vehicles will generally have higher insurance rates because they are likely to incur higher repair costs. Vehicles that have statistically high safety ratings will likely have lower premiums because they are less likely to incur costly damage or fail to protect the vehicle occupants from injury in a collision.
Crime rates in your area will also affect the rate of insuring the vehicle. If you primarily park your car in a “high crime rate” area, your insurance rate will likely be higher. Additionally, insurance adjusters refer to theft rates for particular vehicle models when calculating your rate. Certain car models that are popular targets for criminals (based upon industry data) are usually deemed more expensive to insure because they are statistically more likely to be stolen.
Aside from the industry statistics of the vehicle itself, the characteristics of the driver also affect auto insurance rates. After you have applied for car insurance, the insurance company looks into your driving record, your age and sex, where you live (or where the car will usually be parked), and your primary purpose for driving the vehicle. Generally, people with better driving records (that is, few or no wrecks where the driver was at fault) are given lower insurance rates, with the idea being that the driver is less likely to become a liability. Your demographic information is compared to industry statistics and averages for the above factors, and your premium rate is adjusted accordingly.
Considering these factors, you can see that a low vehicle price tag does not necessarily mean it will be cheap to insure. Analysis by ValuePenguin (LendingTree) reports that the least expensive cars to insure tend to have a price range between $25,000 and $30,000. Cars valued at the $10,000 to $15,000 range are more costly to insure. Vehicles valued at more than $30,000 have the highest insurance premiums.
Instead of worrying about which insurance is right for you (and your wallet), let Boone Ritter Insurance help find the right insurance for you. For more information on how our agency can serve you, contact us here.