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Car Model and Car Insurance

Car model and car insurance prices are closely related. There are many different factors used by auto insurance companies to help them set rates for drivers, such as having a bad driving record. But car model is one of the most important. The same driver could pay double what they would for one car by switching to another. Insurance rates are significantly affected by the types of cars we drive, but the connection between the two may not always be direct as we think. This connection is a bit murkier and harder to predict accurately using sweeping generalizations.

A classic example is probably the perfect one to use in this case. It is basically accepted as fact by most drivers that exotic sports cars are more expensive to insure than sedans. If you were to select a sports car at random and a sedan in the same manner and get some quotes to insure either of them from the same provider, in all likelihood this popular notion would be verified. There are very few cases when it wouldn't be. But it is no automatic. This notion that certain types of vehicles are more expensive than others to insure generally holds true in specific examples, but vehicle type is actually not directly taken into account by underwriters.

How Risk Affects Car Insurance

The reason that exotic sports car you've always dreamed of owning will always be too expensive for you to insure (as well as too expensive to buy!) is not because of the brand name, but because of the underlying risk factors that have historically been associated with that brand name and model. Collision and comprehensive premiums are mostly calculated based on a vehicle's loss history, which takes into account how often a car is stolen and how much it costs to repair or replace after an accident. In many cases, exotic or high performance cars are high on thieves' wish lists, not just for their own value but for the money they can make fencing parts off of them. And obviously, a limited run performance vehicle that costs a lot to buy in the first place will usually cost a lot to repair, and will certainly be expensive to replace.

Insurance companies do not go by popular notions of expense when they determine rates for different models. Instead they rely on sound data from actuarial companies that work to rate different makes and models on several different factors to come up with a determination on how much comprehensive and collision needs to cost in order to cover an insurer's risk and help meet their claims losses. The Insurance Services Office (ISO) is the primary actuarial entity in use by the industry to provide them with this important information. Every vehicle is assigned a risk number and insurance companies use these numbers in the pricing of their policies. So a driver could pay considerably less or more for insurance coverage based on the car they drive.

SUVs and Actuarial Risk

It has long been assumed in public circles that sports cars and other high performance vehicles cost more to insure, as we have previously discussed. The reality is that most of these cars have expensive loss histories making them a substantial risk for companies to insure. And as the evolution of the sport utility vehicle continues to make it more of a popular choice for families, the insurance pricing of this line of vehicles becomes more important. Actuarial work along these lines is consistently demonstrating that SUVs generally cause much more monetary damage when they are involved in accidents than do passenger cars, even if the drivers have enrolled in defensive driving courses. This actuarial risk tied to SUVs makes them expensive to insure in most cases, much more so on average than minivans, which tend to do much better in these ratings.

Car Insurance Quotes Before Buying

The risk classification information that actuarial companies provide to the insurance industry is not available to the public. This is unfortunate, because it would be nice for buyers to take a look at these numbers before they make an automobile purchase decision. But there is still a way to examine insurance pricing before you buy. And actually, this step should always be a part of the car buying process. Consumers who are debating whether to buy a particular car or who are trying to decide from among several possibilities can run the numbers by getting free quotes from an insurance company and see which ones are the cheapest to insure.

Car model and car insurance have a direct and important connection. Buyers are remiss if they do not examine this connection before making a purchase decision. When a car catches your fancy, you want to do what you can to make it affordable. Get multiple quotes from different providers to save on car insurance.

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