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Your Vehicle Choice Can Raise Your Insurance Costs Through the Roof

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Have you ever bought a new vehicle, and when you added it to your insurance, had a shock at how much it raised your premium? This is a common issue because insurance companies give a lot of weight to the type of vehicles you want to insure.

Understanding how your vehicle choice could affect your rates can allow you to make better buying decisions when it comes to a new car and auto insurance.

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Think like an insurance company.

If you want to get the best possible deal on your insurance policy, you have to think like an insurance company when buying a vehicle. Go over each risk factor at which the company will look. Consider how a  Money Expert would evaluate your potential vehicle option.

Insurance companies love information when it comes to providing quotes to potential customers, so they will gather a lot of it from you, including asking what kind of vehicle you have. Make sure you read everything you can about your potential vehicle.

Remember that insurance companies have a lot of resources. They will know everything there is to know about any vehicle you may consider buying. You need to know that information, too. Your insurer will use all of the information it has to assess the risk you present.

Risk boils down to how likely you are to make a claim against your policy. They prefer to partner with people who aren’t very likely to make a claim because it means they will pay out less money.

They also use the information to determine the extent of the risk you pose, which essentially means how much any claim from you is likely to cost. They will use information about your vehicle to figure this out, too. 

You also need to understand that the insurance company likes to earn money, not spend it. Make sure that you focus on buying a vehicle that meets the following criteria:

  • Not difficult to fix
  • Stands up well in an accident
  • Won’t cause extensive damage in a crash
  • Not likely to be a target of car thieves

Factors an Insurance Company Considers and Why

Your insurance company will consider a range of factors about your vehicle that will tell it everything it needs to know about the key risk areas:

  • Size
  • Price
  • Power
  • Theft potential
  • Safety record

Size

According to Kelley Blue Book, the size of your vehicle impacts your insurance rates in several ways. Smaller cars and sporty cars often have higher-risk drivers who drive faster and take more risks. This can lead to higher rates for you.

On the other hand, larger vehicles also increase rates because they drive up liability risks. They cause more damage to other vehicles and property in an accident.

Do your best to stick with a mid-sized sedan or SUV. These don’t increase risk and should have no real impact on your rates.

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Price

The manufacturer’s suggested retail price will impact your insurance rate because it reflects the replacement cost of the vehicle. A higher MSRP means you pay more.

Also, more expensive cars are usually more costly to fix, which increases repair costs. Foreign brands, especially, are more expensive to repair, and additional trim packages will drive up MSRP and the insurance costs because they cost more to repair or replace.

Power

Bigger motors will cost more to insure because more power typically increases the speed at which someone drives. Speed has a direct link to accident risk. If you drive a vehicle that increases your chances of an accident, it makes you a more significant and more expensive risk.

Theft Potential

Common theft targets will cost you more to insure. For example, convertibles are one of the easiest to steal vehicles due to fabric tops. They also represent a high theft risk because they have desirable parts. Adding up these factors, they are often one of the most expensive vehicles to insure.  

Safety Record

The safety record of your vehicle is vital. The Insurance Information Institute explains that cars with bad records introduce a risk for more medical costs associated with accidents, and increase the overall chances of an accident.

Vehicles with advanced safety features help reduce your chances of ending up in an accident, so such vehicles look better to an insurer when computing risk. If you have a car with a good safety record and some advanced safety features, it can help keep your insurance premium low.

A Look at the Worst Vehicle to Insure

Keeping in mind all of the factors an insurance company will consider when assessing your vehicle and the risks it poses, it probably will be no surprise that the most expensive type of vehicle to insure is a sports car.

Not only do these cars tick off all the boxes for elevated risk, but the attitudes of those who drive these cars are often on the riskier side. They may drive faster and be more reckless than someone driving a station wagon, for example.

Furthermore, sports cars have high price tags, and they are expensive to fix. Plus, they attract the attention of car thieves, which only adds to the overall risk of this type of vehicle.  

If you want to keep your insurance costs low, then, regardless of how cool they are or sharp they look, you should avoid buying a sports car. The reality is that the cheapest vehicles to insure are practical, family cars, and SUVs.

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Cars and Insurance: Now You Know

Many people don’t give a second thought to how their choices when buying a vehicle impact their insurance rates. In addition, many people have no idea how large the impact of vehicle choice can have on their insurance policy costs.

Now that you know the details to think about, you can shop smart. If you’re a savvy consumer, you’ll find a balance between buying a vehicle you like and not having to pay outrageous insurance premiums.

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