16 Dec New Car Vs Used Car Insurance Premiums
When it comes to factors determining your car insurance cost, the age of your vehicle is certainly a big one. But this does not necessarily mean a new car is more expensive to insure than a used one. Along with model year, there are many other factors we take into account. Let’s look at the basics of used car vs new car insurance premiums.
First off, when leasing or taking out a loan on a new car, insurance companies (or even the dealership) might offer gap insurance. Gap insurance is designed to protect the buyer from financial disaster if the vehicle ever gets totaled. This type of coverage pays the difference between what you currently owe and the value of your car. Let’s say a driver gets into an accident while owing $20,000 on a loan, the car gets totaled and the insurance estimates the car value at $15,000. Without gap insurance, the driver would have to pay $5,000 out-of-pocket. Gap insurance covers that gap.
Car insurers will look closely at your vehicles make and model and will determine if is at high risk of theft. Believe it or not, the most sought after vehicles are around ten years old. High-theft vehicles are dismantled and sold for parts, which means high volume, inconspicuous cars always make the list.
New cars come equipped with the latest safety features, which means they are less likely to be involved in accidents. Hence, insurance companies pass down the savings to customers with newer cars. New safety features include:
- traction control
- blind-spot warning
- lane departure warning system
- adaptive cruise control
- autonomous braking
- forward collision avoidance system
Insurance companies will also look at the cost to repair and replace parts in case of an accident. Let’s face it, it is easier to find parts for a recent model Prius than it is for a 1980’s Saab. Prices go even higher when the old vehicle is considered a classic or collector car. Collector cars don’t depreciate, so they need a whole separate special policy, where there is an agreed value instead of a cash value.
In the end, the main factors that determine the cost of your premium are your driving history and coverage options. Remember many companies offer bundle insurance and other discounts to help drivers save. If you’re in the market for a new car, don’t let the myth of high cost of insurance stop you. Always compare policies and be sure to keep safety features in mind.