Auto Insurance Can Affect Your Car Deal

auto-insuranceMost new car buyers don’t think about the cost of auto insurance until after the purchase, which can often be a mistake.

As you may already know, the cost of car insurance can vary greatly between different car makes and models.  If you buy a car that has high insurance premiums, the total of your car payments and insurance payments may be much higher than you expected — maybe even more than you can afford.

Let’s say you got a great price on a brand new Subaru Impreza WRX and also got a nice low-interest loan to create low monthly payments. You then go to your auto insurance company and are startled to find out that insurance coverage on that particular vehicle is higher than just about any other vehicle you could have bought — particularly if you are a teen or young adult.

It’s true that the Subaru WRX is one of the most expensive vehicles to insure, along with other vehicles such as the Scion tC, Hyundai Tiburon, Honda Civic Si, Dodge Charger, and Nissan 350Z/370Z.

Do you see the similarity in the vehicles in this list of expensive-to-insure vehicles?

They are all small, high-performance coupes that are popular with young male drivers — who wreck them frequently. In fact, young male drivers who buy these vehicles can expect to pay outrageous insurance rates — because the risk of having an accident and filing an insurance claim is very high.

But what does that have to do with the cost of auto insurance for drivers who are older, and maybe not even the same gender, who buy these vehicles? Do we also have to pay higher rates?

Yes.

Why?

Because insurance companies must spread the cost around, all customers share in higher rates for a vehicle that is frequently wrecked by young drivers. If they charged young male drivers of these vehicles the entire cost of the increased risk they create, the cost of insurance for them would be prohibitive. They couldn’t afford to pay. They couldn’t afford to drive.

So, to reduce the cost to those at higher risk, insurance companies pass along some of the cost to those of us who are lower risk. Even if you are 60 years old with a perfect driving record, you will pay a much higher car insurance premium for a Honda Civic Si coupe than for a less exciting Toyota Camry 4-door sedan.

Said another way, young male drivers actually get a break and don’t have to pay their fair share because older drivers pay part of the cost for them.

Generally, the cost of insurance increases for vehicles that are most expensive to repair, vehicles that are stolen most often, and vehicles that are wrecked most often (according to insurance industry statistics). Vehicles that primarily appeal to young drivers are more expensive to insure than vehicles that appeal primarily to older drivers.

So, regardless of your age and driving record, you should research the cost of auto insurance on the vehicle you plan to buy before you buy. Your great car deal can easily turn sour if your insurance costs skyrocket.

What is the best way to research insurance costs before you buy?

Simple. Just call your own auto insurance company. But don’t assume your own company has the best rates. It’s always a good idea to get multiple quotes from different companies. The quotes are free, so why not?

It’s easy to get quotes online, from car insurance companies such as Esurance.comThis is the easiest way to make sure you are getting the cheapest auto insurance coverage that meets your particular needs.

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