Does the price of a car affect auto insurance rates?
The price of a car affects auto insurance rates since repairs or replacement may be costly for expensive vehicles. For example, while a brand-new Toyota Camry averages $143/mo, a 2010 Camry only costs around $97 to insure. Below, we'll overview how a car's market value affects car insurance rates.
Free Car Insurance Comparison
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Daniel Walker
Licensed Auto Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Auto Insurance Agent
UPDATED: Sep 4, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Sep 4, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
The price of a car affects auto insurance rates significantly, since it costs more to repair or replace newer vehicles. However, your provider also consider other factors such as driving record and coverage choices.
Read More: Compare Auto Insurance Rates by Vehicle Make and Model
Read on to understand how car value impacts car insurance premiums. You can also compare auto insurance quotes in your area by entering your ZIP code into our free quote comparison tool.
- The price of your car can have an impact on car insurance rates
- New cars cost more to insure due to expensive repair or replacement value
- Insurers also consider age, mileage, driving record, and gender
The Price Tag of a Car Affects Auto Insurance Premiums
The cost of your car significantly impacts your rates, and you’ll usually see higher rates for new vehicles. So, why is auto insurance for new cars so expensive?
One reason is that it costs more to replace an expensive car than it does to insure an economy car. Another reason why an expensive car may have a higher rate is that they are statistically at higher risk for auto theft, especially if it is a sportier version.
Then again, the world of car insurance is very complex. In some cases, a newer, more expensive model could be cheaper to insure than an older model since insurance companies also consider safety features.
An insurance company is going to look very kindly on a newer vehicle that offers more protection in an accident.
Another reason why an older vehicle could cost more to insure is the cost of parts. The older a vehicle ages, the harder it gets to find replaceable parts, making the purchase price more expensive.
Read More: How do insurance companies determine car value?
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Other Factors Car Insurance Companies Consider When Determining Premiums
Insurance companies also look at other factors that affect auto insurance rates. While it’s impossible to know what formula each insurance carrier uses to calculate risk, it is important to know what areas are commonly considered.
This can help you shop smarter and understand how life changes can affect your insurance rates. Here are some of the common areas that insurance companies consider:
Your Driving Record
Your driving record is one of the most important factors that insurance companies use when determining your rates. Your driving record says a lot about you as it gives an inside look at your driving history over a specified period of time.
It will tell the insurance company if you are a good driver with little to no problems or a reckless driver with a build-up of the following:
- Speeding tickets
- Accidents
- Claims
Younger drivers who do not have much of a driving record will likely pay more for car insurance. One thing is for certain, the better your driving record, the lower of a risk you are and the lower your rates will be.
Your Demographics
Gender roles play a significant role in calculating insurance rates, as men tend to pay higher rates for coverage than women. So, why are auto insurance rates higher for males?
Statistics say that men are more likely to get DUIs and are also more likely to be involved in a fatal accident. However, as time goes on, rates will be calculated on individual driving history.
Your marital status also can play a small role. Those who are married tend to be more responsible and less likely to be involved in risky activities. The insurance company sees married couples as less of a risk.
This is why married couples tend to pay less for car insurance than those who are single.
Your Credit-Based Insurance Score
You may be wondering what your credit score has to do with your risk of getting in an accident. Those who have low credit scores tend to make poor judgments. The insurance company translates that into being a high-risk individual for making claims.
Read More: How Credit Scores Affect Auto Insurance Rates
Insurance companies commonly look at:
- What debt you have
- Your payment history
- The length of your credit history
- Whether you’ve recently opened any new lines of credit
- What loans, credit cards, or other terms of financing you are currently paying on
Some insurance companies will not insure those with bad credit. Keeping a good credit score will help keep you from being labeled as a high-risk customer. You can also shop around with the best companies for credit-based auto insurance for cheap rates with bad credit.
Your Location and Crime Rate
Where you live can either help you or hurt you insurance-wise. If you live in a busy city that has high crime rates, you’re at more risk for theft than someone who lives out in the suburbs. The same ideology applies to being at greater risk for a car accident.
Read More: Does auto insurance cover theft?
According to an article in USA Today, those who live in Detroit pay a whopping 165% more than the national average for car insurance.
Another reason why location is important is because insurance companies want to know how much you drive. If you're driving 40 miles on the highway to get to work every day, you're at higher risk of getting into an auto accident.Travis Thompson Licensed Insurance Agent
Not every insurance company uses all of these factors, and they may even consider other factors not listed.
How to Save on Auto Insurance
Saving money on car insurance is easy, but the savings are often overlooked if you aren’t educated about what’s available to you. Many car insurance companies offer auto insurance discounts in a variety of areas, including:
- Bundling insurance policies, such as home and auto
- Insuring more than one vehicle
- Installing anti-theft devices
- Choosing a hybrid vehicle
- Keeping a clean driving record
- Taking a defensive driver course
- Driving low miles throughout the year
- Being a part of the military
- Paying your premium in one lump sum
- Maintaining good grades for younger drivers
- Enrolling in paperless or automatic billing
Another way to save money is to compare multiple insurance quotes to see which one is best for you. An easy way to compare multiple quotes all at once is to use online comparison tools.
The type of vehicle you purchase matters to your insurance provider.🤯 Save money and compare rates today on our site🤑: https://t.co/27f1xf131D. Find vehicles that are cheaper to insure than others🤩: https://t.co/heKtRZ8iKT. pic.twitter.com/7tY0RV4zDl
— AutoInsurance.org (@AutoInsurance) March 15, 2023
These online comparison tools eliminate the hassle of calling around or visiting multiple insurance agencies. Searching online is quick and easy and can be done from the comfort of your own home.
More About How Vehicle MSRP Impacts Insurance Rates
The number of factors that go into determining your car insurance goes well beyond the price of your car. So don’t let that necessarily sway you one way or another when you’re thinking about your ride.
Compare insurance quotes from the best auto insurance companies to find the perfect policy for you despite your car’s value. Compare today by entering your ZIP code in our rate tool below.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Frequently Asked Questions
Does the price of a car affect auto insurance rates?
Yes, the price of a car can impact auto insurance rates. Generally, more expensive cars tend to have higher insurance rates due to factors such as repair costs, theft risk, and replacement value.
Why do expensive cars have higher insurance rates?
There are several reasons why expensive cars often have higher insurance rates:
- Repair costs: Expensive cars typically have high-end parts and sophisticated technology, which can lead to higher repair costs. In the event of an accident or damage, insurance companies may need to pay more for repairs or replacement parts, resulting in higher premiums.
- Replacement value: If an expensive car is stolen or deemed a total loss, the insurance company would need to compensate the owner for the vehicle’s value. Higher-priced cars have a higher replacement value, increasing the potential payout for the insurance company and, consequently, the insurance premiums.
- Theft risk: Luxury or high-performance vehicles are often targeted by thieves, as they have a higher resale value or may be in demand for parts. The increased risk of theft can contribute to higher insurance rates.
- Safety features: Expensive cars often come equipped with advanced safety features and technology. While these features can enhance safety and reduce the risk of accidents, they can also increase the cost of repairs or replacement if they get damaged.
Does the make and model of a car affect insurance rates?
Yes, the make and model of a car can influence insurance rates. Insurance companies consider factors such as the car’s safety record, likelihood of theft, repair costs, and historical claims data for specific makes and models. Generally, cars with good safety ratings and lower repair costs tend to have lower insurance rates.
Are there other factors that influence auto insurance rates?
Yes, the price of a car is just one of several factors that can affect auto insurance rates. Other factors include:
- Driver’s age and driving record: Younger, inexperienced drivers or those with a history of accidents or traffic violations may face higher insurance rates.
- Location: Where you live can impact insurance rates. Areas with higher population density, increased traffic congestion, or higher rates of theft or accidents may have higher premiums.
- Coverage limits and deductibles: The amount of coverage you choose and the deductible you select can influence your insurance rates. Higher coverage limits and lower deductibles typically result in higher premiums.
- Insurance history: Your insurance claim history and the length of time you’ve been continuously insured can also play a role in determining your rates.
- Credit history: In some jurisdictions, insurance companies may consider credit history when determining rates. A good credit history is often associated with lower insurance premiums.
Can I save on insurance for an expensive car?
While insurance rates for expensive cars are generally higher, there are steps you can take to potentially lower your premiums:
- Shop around: Obtain quotes from multiple insurance providers to compare rates and find the best coverage at a competitive price.
- Choose a higher deductible: Opting for a higher deductible can lower your premiums. However, ensure you can comfortably afford the deductible amount in the event of a claim.
- Safety features and anti-theft devices: Equipping your car with security systems, anti-theft devices, or advanced safety features may help reduce insurance rates. These features can help protect your vehicle from theft or lower the risk of accidents.
- Bundle insurance policies: If you have multiple insurance policies, such as home and auto insurance, consider bundling them with the same insurance provider. This can often lead to discounts or reduced premiums.
- Maintain a good driving record: Practicing safe driving habits and avoiding accidents or traffic violations can help keep your insurance rates lower over time.
Are older cars cheaper to insure?
Yes, usually it’s cheaper to insure an old vehicle because they cost less to repair or replace.
Which car is most expensive to insure?
Generally, luxury vehicles, such as Maseratis or Porsches, have the highest car insurance rates due to their high MSRP and theft rate.
What color car is more expensive to insure?
Your vehicle color doesn’t impact your auto insurance rates.
What color car holds value best?
You can usually expect yellow, orange, or red cars to retain their value the best.
Is car insurance cheaper for male or female drivers?
Generally, men pay higher auto insurance rates because they’re more likely to get into accidents.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Daniel Walker
Licensed Auto Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Auto Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.