Personal Finance Expert
Tyron Jones is a finance expert who has operated within the auto insurance business for more than 10 years. He has written many other finance related articles for a number of prominent publications.
Have you ever wondered why your car insurance rate differs from another person? You might be driving the same type of vehicle (sedan or SUV), yet the insurance costs largely differ. What gives? A lot of consumers are puzzled about how the auto insurance industry works but it isn’t rocket science. Car insurance companies evaluate a number of factors that will enable them to charge the right amount for each driver to cover for costs associated with damage or accidents in the future.
As a car owner, it is your responsibility to shop around if you seek the cheapest insurance for your vehicle. But you must be warned: you should not compromise coverage in exchange for getting the lowest insurance rate. That is why it is important to understand the various factors that could affect car insurance as you shop insurance quotes so you know what factors you can take advantage of.
Factors for Computing Car Insurance Premiums
To help determine the cost for insuring your vehicle, here is a breakdown of the common factors that car insurance companies use. As you can see, these rates are not set arbitrarily but rather evaluated using factors that are directly linked to certain risks and damages.
1. Vehicle Factors
The vehicle factors refer to information that directly relate to the type of vehicle you are driving. This is the first thing that car insurance providers look into. Specifically, they evaluate your insurance cost based on these factors:
- Year – The year that your vehicle was manufactured or released is evaluated for your insurance rate. Some insurance providers will offer new car discount but depending on the model, some new vehicles will also incur higher insurance cost. The insurance cost is directly proportional to the perceived market value of the vehicle. Since newer vehicles cost more, they will also be insured at a higher price.
- Make – The make of the model will determine the features, quality, and the safety of the said vehicle. For example, a luxury sedan will cost more to insure than a standard mini-van. If a particular vehicle make is manufactured overseas, it will also drive up insurance costs. Insurance companies take into account the fact that replacement parts must be shipped overseas.
- Model – Vehicles from the same manufacturer and of the same make will have different insurance rates. The reason for this is that there are various models for each vehicle type. A base model is going to be less expensive to insure than a top-of-the-line model.
- Safety Features – The safety features such as car alarm and anti-crash features within a vehicle can lower the cost of insurance. And that is why car insurance providers love them – and you will love them, too, if you want to keep the cost of insurance down. The reasoning behind this is that the more safety features are equipped into a vehicle, the less risk of theft or damage it will incur.
- Number of Vehicles Insured – Some insurance companies enable you to buy insurance for more than one vehicle. When you opt for a multi-car policy, you can get a discount to significantly lower insurance rates (compared to buying individual policies for each car).
2. Driver Factors
Factors directly linked to the vehicle are not the only ones evaluated by insurance companies. They also take the driver into account. This is why insurance costs could differ even for the same vehicle. The information on each driver is collected and insurance rates are calculated based on risk factors.
- Age of Driver – The age of the driver is a significant factor that influences the cost of car insurance. Teenage drivers are more expensive to insure than adult ones. The formula will differ from one car insurance company to another. In general, though, 25 is the ideal age for insurance providers if you want to achieve your preferred rate.
- Driving Record – Upon application, insurance companies don’t have much information available to assess a client’s ability to drive. They rely on information provided on the driving record. If your driving history contains traffic violations and accidents, it will be reflected on your car insurance quote. This is why some people will seek out companies that specialize in bad driving record car insurance.
- Driver’s Address – This might seem far-fetched to you but insurance companies evaluate the location where the driver lives. One reason for this is that some neighborhoods have higher cases of theft and vandalism. For areas with high claims ratio, they are considered higher risks for the insurance company, as well.
- Existing Health Insurance Coverage – If you have existing health insurance coverage, you can lower your medical coverage on your car insurance. You might have to check with your state laws regarding this first to ensure that you are getting the right coverage.
New vs. Old Car Insurance
If you are in the process of shopping for a car, you have two options: buy a brand new unit or second-hand vehicle. Each choice has their own sets of pro’s and con’s. Budget is sure to be one of the most significant factors to influence your decision as the cost of acquiring each will vary significantly. When weighing your options, you should also consider the cost of insuring the car.
Age is one of the most basic factors that insurance companies look into when calculating insurance premiums. Your choice between brand new or used cars will determine the insurance cost you’ll end up paying.
Insurance on New Cars
Most people would assume that new cars will come with more expensive insurance rates. While this is true to some extent, many new car models have a ton of safety features. The increased safety of the car users help to lower your insurance rates. Car insurance companies calculate the cost of insurance coverage and corresponding rates based on the expected damage to the vehicle in the event of a collision or crash. Get a new car insurance estimate by starting our quote form above with your zip code.
One thing that could work against brand new cars is that they are more prone to theft (plus, certain models and makes are also associated with high theft rates). But with new technology such as GPS tracking systems and anti-theft alarm, this issue has been mitigated. You need to evaluate this closely as this could cost you to pay higher interest rates. If you have the safety features mentioned above to fend off theft, make it known to your car insurance provider.
Insurance on Used Cars
When buying a used car, you need to check and verify the car’s vehicle identification number (VIN). It also pays to research on the vehicle history so you know if it has been salvaged.
Buying car insurance for used vehicles can be tricky. You need to decide on the necessary insurance coverage that you need as it will help to significantly reduce your car insurance rates. It is mandated by law that you purchase liability insurance (that covers for injuries or damage caused to others) but you can also protect yourself further by buying other types of coverage.
Comprehensive coverage is a type of insurance that covers for damage that is not directly related to accidents. This could be in the form of theft or vandalism. On the other hand, there is collision insurance that specifically covers damage to vehicle caused by collision or striking an object on the vehicle.
The overall condition and any crash history on the used car can be crucial factors in calculating insurance costs. If the vehicle is damaged or it has been involved in a crash before, insurance might be higher. Make it a habit to do comparison shopping so you can get the affordable car insurance for the right coverage.
Which Cars Are Most Expensive to Insure?
From 2010 to 2016, car insurance rates have gone up by as much as 33%. This calls on the need to be extra patient when comparing car insurance quotes if you want to keep it low. But there are certain things that are beyond your control, such as the type or model of vehicle you are driving. As the primary factor of consideration, you can expect that some vehicles are going to be more expensive to insure than others.
In terms of the average cost of insurance, here are the most expensive cars to insure (as of 2018):
- Tesla Model S (4-door, 4WD) – $1,789 per year
- Mercedes Benz S Class (4-door, 2WD) – $1,540 per year
- Mitsubishi Lancer 2WD – $1,458 per year
- Scion FR-S – $1,403 per year
- Dodge Charger 2WD – $1,385 per year
- Kia Optima Hybrid – $1,355 per year
- Dodge Challenger – $1,335 per year
- Audi A7 4D 4WD – $1,322 per year
- BMW 4 Series 2D 2WD – $1,306 per year
- Lexus GS 350 4D 2WD – $1,295 per year
Frequently Asked Questions
Factors Affecting Car Insurance Premium
There are several factors that insurance companies take into account when evaluating the cost of insurance for each vehicle. Get an insight about what these factors are and how insurance companies use those factors for quoting an insurance rate.
Are red cars more expensive to insure?
No. This is one of the biggest myths in the auto insurance industry. Insurance companies are not interested in the color of your car but rather the year, body, type, make, and model.
Are automatic cars more expensive to insure?
The higher claim costs involved and the cost of replacing any potentially damaged parts contribute to driving up the insurance for automatic vehicles. So, yes, automatic cars have a more costly insurance premium.
Are older cars more expensive to insure?
No. On the contrary, newer cars cost more in terms of insurance fees. Older cars come with cheaper insurance rate. But the age of the vehicle is just one factor for calculating its insurance; the make and model of the vehicle can impact insurance cost, as well.
Are leased cars more expensive to insure?
Yes. The cost of buying insurance for a leased car is more expensive than insuring your own vehicle. The reason for this is because the lease agreements dictate this specifically, wherein the lessee is obliged to secure higher limits of coverage. Lien holders do this in order to protect themselves from the liability during car accident.
Are hybrid cars more expensive to insure?
Yes – in comparison to normal cars, hybrid cars cost more to insure. The simplest explanation for this is that hybrid cars are more expensive – the cost of the vehicle is one of the most significant factors used for evaluating the insurance cost. You can therefore expect that more expensive cars will also have expensive insurance costs.
Is it more expensive to insure an electric car?
Yes. Electric cars cost more to insure. Some insurance experts claim that you should expect 18-32% higher in terms of insurance rates compared to gas-powered cars. This is one of the downsides to owning an electric vehicle, which is cheaper to run.
Are rebuilt titles more expensive to insure?
The cost of insuring cars with rebuilt titles will depend on your insurance company. Some won’t offer comprehensive or collision coverage, although you can obtain cheap liability car insurance for it. One of the advantages of rebuilt cars is that they come with a cheaper cost. For this reason, the insurance cost is also cheaper.
Are salvaged titles more expensive to insure?
Yes, it is. You can insure a car that has a salvaged title. However, don’t expect to get the best coverage and even so the insurance will still be expensive. The most coverage insurance companies can offer those with salvage titles would be liability insurance.
Are automatic cars more expensive to insure than manual?
Yes. Since automatic cars are more expensive in their value and have higher claim costs, it is therefore priced at a higher range by insurance companies when compared to manual vehicles (regardless of the vehicle model or make).
What color cars are more expensive to insure?
There is a misconception among car users and consumers that color plays a factor in determining the cost of insurance for a vehicle. However, the car paint color does not factor into the insurance company’s calculation on the car insurance cost. When insurance companies evaluate your insurance application, they do not even know the car color.
Is it expensive to insure 2 cars?
If you have more than one vehicle, you can try to apply for insurance under single policy for multiple vehicles. Almost all insurance companies offer multi-car policies. When you get insurance for two cars from the same insurance company, you can get the insurance at a cheaper price. Also ask if they offer first month free car insurance.
Is it more expensive to insure a hybrid car?
Yes. Hybrid cars are generally more expensive than normal cars. This higher sale value translates to higher insurance cost. The price of the car is a huge factor in calculating the insurance premium of a vehicle. Other factors can also contribute to increasing a car’s insurance cost.
Are trucks expensive to insure?
The cost of insuring a truck is relatively higher in comparison to cars. The reason for this is that trucks are more expensive and will be more costly to repair (particularly when involved in an accident). The actual cost of insurance for trucks will vary largely according to the make and model, year of the model, and the insurance provider.
Is it expensive to insure a motorhome?
The cost of insuring a motorhome will vary according to the class categories of said vehicle. For instance, Class A motorhomes are the most expensive and largest models; hence, they are also unsurprisingly the most expensive type of motorhome to insure. For this type of motorhome, insurance cost would range from $1,000 to $4,000 per year. The Class C motorhomes are considerably cheaper with an annual average cost for insurance starting at $800 but can go up to $3,000, depending on the model. Meanwhile, Class B motorhomes are the least expensive because their sizes are similar to a full-sized van. For this motorhome classification, the annual insurance would range from $500 to $1,000.
Are red sports cars more expensive to insure?
This is a common myth in car insurance. Just like red cars, red sports cars in general are evaluated in the same way as any other colored vehicle. The auto industry (specifically the auto insurance industry) is color blind.
Are SUVs more expensive to insure?
In comparison to sedans, the cost of insuring SUVs is definitely going to be more expensive. But the actual insurance quote will vary depending on the make and model of the SUV you are driving/own. Each manufacturer and model offers different designs, safety features, performance on crash tests, and other factors that insurance companies evaluate when calculating insurance premiums. On average, you can expect for an SUV’s annual insurance to be around $1,200.
Are imported cars more expensive to insure?
Yes. The reason behind this is clear – imported cars will cost more to repair. Most of the imported cars require their replacement parts to be shipped from overseas, which will drive up the cost of repair. The rarity of the model will also make it more attractive to car thieves. These factors are among the reasons why imported cars are more costly to insure.
Are pickup trucks more expensive to insure?
When compared to sedans, yes pickup trucks are more expensive to insure. The most obvious reason for the high insurance cost of pickup trucks would be the cost of the vehicle itself. Pickup trucks cost more to purchase than sedans, so they will also cost more to insure. Another factor is that pickup trucks are mostly driven in off-road destinations wherein it is prone to damage. The sheer size and weight of the vehicle also causes more damage to other vehicles and properties in the event of an accident. All of these factors come into play when insurance companies calculate the insurance premium on pickup trucks. Most pickups would be insured at $1,478 to $1,605 per year, depending on the specific model.
Is it more expensive to insure a convertible car?
Convertible cars can put a serious dent on your budget, both in terms of the purchasing cost and the cost of insurance. The average insurance premium for a convertible is at $2,081 annually. Expect this rate to go higher or lower, depending on which model you are driving. The higher horsepower, possibility of theft, and weight of the vehicle are some of the reasons why insurance prices for this vehicle type are extremely high.
Insurance According to Vehicle Model/Make
Different manufacturers, models, and vehicle types are taken into account when calculating car insurance premiums. Find out how specific models and manufacturers are priced, as far as insurance rates are concerned.
Are Volkswagens expensive to insure?
It depends on the specific model. However, most Volkswagen cars are more expensive to insure than other models. It is because insurance companies view Volkswagen models are generally safer.
Are coupes more expensive to insure than sedans?
In general, coupes are more expensive than sedans to insure. But several factors can also come into play such as the car’s make, safety features, and model. You can also expect sporty coupe to be more expensive than a four-door sedan in terms of its insurance policy.
Are corvettes expensive to insure?
The cost of insuring a Corvette is estimated at over $1,800 a year. This insurance fee is higher than most of its rival sports car. Aside from being expensive itself, the cost of repair for a Corvette is not cheap, especially if major components need repair. All of these factors add up to making insurance costly for a Corvette.
Are land rovers expensive to insure?
Land rovers are made up of expensive components. Thus, it means that they are expensive to maintain and repair. Insurance companies take these into account when calculating the insurance premiums of Land Rovers. For this vehicle model, the average annual insurance cost is at more than $2,700.
Why are Subarus so expensive to insure?
It varies according to the specific Subaru model you are driving. Some Subaru sedans cost $1,600 a year on insurance while others cost only $1,200. The costly repair of Subaru models combined with the cost of buying them to make this an expensive vehicle to insure.
Why are civics so expensive to insure?
Honda Civics are notably expensive to insure. There are several reasons for this but the overall car value is one of the most notable factors. According to insurance experts, the overall cost of fixing or repairing a car can affect insurance rates by as much as 10%. Aside from cost of repair and vehicle value, driving history is also a factor.
Are Camaros expensive to insure?
Camaro is considered as a sports car with a horsepower ranging from 275 to 650. This power might be the reason you might want to covet it, but it is also what makes insurance expensive. Another reason that could drive up the cost of insurance is the fact that this is a highly desirable car, and as such is more at risk of being stolen. These factors add to the risk that causes the insurance to hike up.
Are Cadillacs expensive to insure?
The average premium on insurance for Cadillac models is at $1,500 to $2,200, depending on the specific model. It is known as a premiere luxury car brand in the US. On top of that, Cadillacs are targeted by car thief because of its popularity. This explains why Cadillacs are priced higher when it comes to car insurance.
Are Dodge Chargers expensive to insure?
Dodge Chargers might feature an understated design but it offers major horsepower (up to 700). This power makes the Dodge Chargers expensive to insure. It is one of the most expensive cars to insure with an average of $2,076 per year in insurance rates.
Is the Infiniti g37 expensive to insure?
No. The Infinity G37 is one of the cheapest sedans to insure. In fact, it costs cheaper than the national average – specifically, $214 cheaper. This budget car is reflected in its insurance coverage. So if you want to save on car insurance this is a good choice.
Is Kia Soul expensive to insure?
The Kia Soul is not expensive to insure. The current average insurance for this Kia model is $485 cheaper than the national average. The actual insurance quote is also going to vary according to the number of miles driven, driving record, and a few other factors.
Are Lexus expensive to insure?
The cost of insuring Lexus will vary according to the specific model. As of now, the average cost of insurance for a Lexus is $1,944 per year (around $162 per month). The actual cost of insurance will vary depending on numerous factors such as your driving record, car history, mileage, and year of model.
Are Jeeps more expensive to insure?
The answer to this will largely vary according to the type of Jeep you drive. There are some Jeep models that are cheap but there are also luxury models that are on the higher range of the price tag. Thus, the cost of insurance for these models will vary accordingly. To give you an idea, the Jeep Wrangler Sport (one of the most popular Jeep models) has an average cost of $1,134 in annual insurance.
Are Hondas expensive to insure?
In general, Honda models are expensive to insure than other car models or makes. One of the reasons cited for this is that Honda parts are more expensive to replace during repair. Hence, insurance companies calculate that when determining the insurance quote for Honda vehicles. But you need to compare various insurance providers to get the most favorable free online car insurance quotes.
Are Jettas expensive to insure?
No. The Volkswagen Jetta insurance is relatively cheap. In comparison to the US national average, the annual insurance rates for Jettas is lower by as much as $299. The average insurance for the first year of ownership of Volkswagen Jetta is approximately $1,068.
Why are mini coopers so expensive to insure?
No, Mini Coopers are not inexpensive in terms of insurance cost. In fact, they are as affordable to own and drive as they are to insure. The average annual insurance rate for a Mini Cooper is $1,250. This is a relatively cheap price to other sub-compact cars.
Are Volvos expensive to insure?
It depends on the model of Volvo car that you own. Among the most expensive Volvo cars to insure are the 2018 S90 T6 sedan, 2018 Volvo V90 T6 wagon, 2018 Volvo S90 T8 sedan, 2018 Volvo XC90 T8, and the 2017 Volvo XC90 T8 SUV. For these models, the insurance cost will range from $13,200 to $15,103.
Are Dodge Avengers expensive to insure?
The cost of insuring a Dodge Avengers vehicle will vary according to the year, make, and model. The cost-to-insure value of the Dodge Avengers is poor while the rate-to-purchase cost ratio is high. There are various rates available for the insurance of the Dodge Avengers and it could vary from state to state. On average, the annual insurance is at $1,300.
Are BMW expensive to insure?
While BMWs are generally expensive as far as vehicle prices are concerned, they are not as expensive to insure as you would expect. As of now, the average annual insurance cost for BMWs is at $1,966. One of the most expensive BMW models to insure is the BMW 750i with an annual insurance of $3,280.
Are Lincolns expensive to insure?
Lincolns are not only known for their pricey tag; they are also notorious for being expensive to insure. The average annual insurance for a Lincoln is at $1,693. Aside from its expensive price tag, there are other factors that make the insurance cost steep such as safety features, specific model features, and the driving history of the car owner.
Why are Hyundais so expensive to insure?
Hyundai is a Korean auto maker that has made a name for itself in the global auto industry. Surprisingly, the price tag for Hyundai vehicles is fairly reasonable. If that is not enough, they are also known for having exceptionally low insurance rates. The annual average for the Hyundai vehicles is at approximately $1,398.
Are Honda Accords expensive to insure?
The Honda Accord is one of the most popular models from Honda. It is affordable and reliable, but is also a favorite among car thieves. Due to this dubious honor, insurance for Honda Accords can be really high. It is one of the top factors that insurers look into when evaluating the insurance premiums for Honda Accords.
The annual average for the Honda Accord is estimated at $151 a month or $1,812 per year.
Are Acuras expensive to insure?
Acura is a luxury car brand. But you might be surprised that despite the price tag for Acura vehicles are not exorbitantly expensive. This can be attributed to the safety features and reliability of this vehicle, which makes it less of a risk to be driven. Most insurance companies charge $166 per month (or around $1,992 per year) on Acura insurance. But other factors can also impact the insurance cost, which includes age of driver, driving history, and the model.
Are Infinities expensive to insure?
Infiniti is Nissan’s own luxury vehicle division to compete with Honda’s Acura and Toyota’s Lexus. But despite being a luxury vehicle brand, Infiniti has a fairly reasonable insurance cost (in relation to the price tag of the car), which is at $1,996 per year. Still, this is an expensive rate especially when you are to compare it with the national average.
Are Mazda CX5 expensive to insure?
The Mazda CX5 is one of the higher end models from Mazda. Depending on the model, the prices range from $16,990 and $71,200. The CX5 is somewhere in the middle of this price range with prices going up to $49,990. The annual average insurance for the Mazda CX5 is at $1,015. This makes the cost-to-base car price is estimated at 3.5%.
Are Audis expensive to insure?
The cost of insuring an Audi vehicle is higher than most other car models. It will also depend on which Audi model you drive because the insurance rates can differ significantly. The annual rate for insurance can range from $2,500 to $3,384. This price range is in line with insurance cost for most other luxury cars in the market.
Are Lancers expensive to insure?
The Mitsubishi Lancer comes with a price tag of around $17,795. This is a fairly affordable vehicle, but you might be surprised to know that its insurance is actually a bit expensive. The cost of repairing the Lancer is part of the reason why it is unpopular with insurance companies. The current annual average for Lancer models is at $1,458.
Is a Chevy Tahoe expensive to insure?
The Chevrolet Tahoe is on the higher end of the scale when it comes to vehicle prices. For this reason, you can expect that the insurance premium is also on the higher end. The average cost of insuring the Chevy Tahoe is at $1,169 per year. This can go up or down depending on other factors such as year of the model, driving history, mileage, and more.
Are Mazda Rx8 expensive to insure?
Mazda is an auto maker with a reputation for incorporating plenty of safety features into their car design. The same can be said of the Mazda RX8. With a host of safety features, it lowers the liability of the insurance company in the event of a collision or any form of vehicular accident. These factors combine to lowering the overall insurance premium for Mazda RX8, which is lower than the national average at approximately $750. Other factors can impact the final quotation but this is the average.
Are Mustangs expensive to insure?
The Ford Mustang undoubtedly makes the list of the most expensive cars to insure. There are several reasons behind this. One of those reasons is that the Ford Mustang is one of the best-selling cars in the US. Second, it is also high on the price tag list. It is estimated that the annual cost of insuring Ford Mustang would range from $1,600 to $1,992. That would be roughly $166 per month in insurance cost. Also see our article titled How much is car insurance per month?
Are Saabs expensive to insure?
Saab vehicles are known for its refinement, safety features, and sense of luxury. When they were first released into the market, it was sought after for the qualities mentioned above. But when Saab was discontinued, it only contributed to making these vehicles more expensive to insure. Since this is an imported brand, the replacement parts are manufactured overseas. It would mean that repairing Saab cars would make it an expensive proposition for insurance companies. These factors combine to causing the insurance for Saabs to hit around $1,539 annually.