When purchasing a new vehicle, consider various financial factors beyond the car’s price. Auto insurance is one of the most significant expenses to consider, as the average annual rate in the US exceeds $1,300. This can add up to a total cost of around $7,800 over a typical six-year ownership period. However, the exact insurance cost will vary based on the type of car you purchase. Consider factors like the car’s make, model, and safety features when determining your insurance costs. Read on to know more.
How New Is Your Car?
The cost of an insurance policy is closely related to a car’s value, and a car’s value is closely related to its age. This relationship is particularly evident for mainstream vehicles, as older cars tend to have a lower value. Even if you were to purchase the exact new car with the same features as your old one, the new car would be worth more and therefore have higher insurance rates.
How Much More Technology Does Your Car Have?
When upgrading from an older car to a brand-new one, you can expect an improvement in technology. Modern cars have advanced features such as mobile Wi-Fi, LED lighting, state-of-the-art safety systems, and large touchscreen displays. However, these features can be costly to repair or replace; insurance companies consider this when determining their rates. Therefore, purchasing a newer and more technologically advanced car may result in higher insurance costs. While a few insurance companies may offer discounts for specific driver-assistance technology, most companies believe that the cost of repairs outweighs any potential savings from avoiding accidents.
Did You Upgrade Elsewhere?
You can expect to pay higher insurance rates when upgrading to a new car with additional equipment that your previous car did not have. While having additional features can increase the value of your car, it also increases the cost of your insurance policy. For example, heated seats, which used to be a luxury feature, are now available in many standard vehicles and add additional costs to your insurance.
Is Your New Vehicle a Target for Thieves?
Insurance companies not only consider the risk of accidents but also the risk of intentional damages like theft. A study by the Highway Data Loss Institute found that certain cars are more likely to be stolen than others. These cars were found to be desirable due to their luxury, power, and brand. So, your insurance rates may rise if you have an expensive car.