Buying Your First Car with Insurance in Mind

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by Will Koblensky December 7, 2018 / No Comments

One of the few ways a new driver can make sure their car insurance premiums stay low is by buying the right vehicle, but car insurers have a rather complex way of determining how much the premium should cost.

While most people know safer cars are less expensive to cover, not all first-time car buyers are aware that newer and more expensive models have the potential to drive up car insurance quotes. That’s because newer and more expensive vehicles cost more to replace.

In the event of an accident, the insurer risks paying out a larger sum of money to repair or replace a 2018 Audi A4 compared with a 2009 Subaru Outback, a risk that directly translates into the insurance premiums.

However, some older, less complex vehicles are seen as less safe so it’s not a hard and fast rule. For instance, a 2018 Honda Civic will cost $24 less in premiums per month than a 2015 model, according to our vehicle insurance calculator.  Though typically older models incur lower premiums, newer vehicles with advanced safety features and locking mechanisms can help alleviate the price of insurance.

How insurers price vehicles

Vehicle brands and model years are rated riskier or less risky, determining their cost to insure, using the Canadian Loss Experience Automobile Rating (CLEAR).

CLEAR determines how much an insurance premium for a vehicle should be, based on car insurance claims data from Canada and the U.S.

Anti-theft devices, anti-lock brakes, top-notch tires, side-impact door reinforcements as well as dual and side airbags all create a lower auto insurance quote under the CLEAR system.

As of 2017, the Insurance Institute for Highway Safety (IIHS) has begun including “small overlap front crash protection” in how it assesses a vehicle’s safety, affecting the price of insurance. A small overlap front crash protection is a safety feature meant to keep people inside the car safe in the event of an accident.

Particularly for teenagers, the institute warns high-horsepower vehicles would result in higher insurance premiums while electronic stability control would result in lower premiums. How a model has performed on the roads historically is also of importance.

Take the time to compare car insurance for old, new and used vehicles with these factors in mind can help the new driver find the right price.

A few warnings when buying used

  • A used vehicle might have been modified, which could result in the insurer denying a claim, according to Economical Insurance. They advise running the specs by an insurance broker prior to buying a used vehicle.
  • If the driver is leasing or financing their vehicle, the lender will likely require comprehensive and uninsured motorist coverage. Those additional coverages will push up the price of insurance for most first time buyers, who rarely purchase their vehicle outright.
  • Another major factor here is how popular a given vehicle is with carjackers. While the Ford F-250 is a reliably safe pickup truck, for example, it’s also the 10th-most stolen vehicle in Canada, making it more expensive to insure.

This may all seem quite daunting, but luckily the Insurance Bureau of Canada aggregates how insurers rate each vehicle make, model and year. Ratehub.ca went through the data and found some of the vehicles with the least number of claims, thefts and reported incidents, which would result in lower premiums.

Here are some of those vehicles with the best overall ratings from Canadian insurers. Pricing is provided by Autotrader.ca:

SEDAN

Make/Model

Used Price

Chevrolet Optra 5 Door, 2005

~$3,000
Mazda 6 Sport 5 Door, 2003-2005

~$7,000

Mazda MX5 Miata Convertible, 2006-2008

~$10,000

 TRUCK 

Make/Model

Used Price

Dodge Dakota 2 or 4 Wheel Drive, 2007 or older

~$10,000
Ford F-150, 2 Wheel Drive, all years (pricing for 2010 models)

~$10,000

Mazda B-series, 2- Wheel Drive, especially 2003-2008

~7000 (for 2007 model)

SUV / WAGON / CROSSOVER

Make/Model

Used Price
Ford Explorer 4 Door, 2 Wheel Drive, models before 2008 ~$10,000
Subaru Outback Wagon All Wheel Drive, especially the 2005 model

~$9,000

Volvo V70 Wagon All Wheel Drive, especially the 2003 to 2005 models ~$6,000

Look past the advertising

New drivers should know the most popular cars in the country aren’t the cheapest to insure and even if a vehicle’s brand might be built around its image of safety, insurers’ data may contradict the marketing.

Best practices like checking vehicle components for product recalls will help avoid both a buyer’s remorse and an insurance nightmare. Drivers can check Transport Canada’s Motor Vehicle Safety Recalls Database and simply search a vehicle to find if it is affected by a recall.

The new driver is somewhat caught between a rock and a hard place in finding a car that’s not too expensive because its value will increase the insurance quote, and not buying too cheap, should the vehicle be deemed unsafe.

Comparing apples to apples

Finding the Goldilocks option takes a fair amount of research, but the good news is there are a lot of safe yet stylish vehicles that improve a driver’s insurability.

  • Both the Chevrolet Malibu and the Ford Fusion are stylish vehicles and well regarded by insurers. But the Malibu can cost a new driver $60 less in insurance premiums per month because it’s a more reliable vehicle, has less acceleration power and is slightly cheaper than the Fusion.
  • There are some vehicles that age better than others so keep it in mind when choosing a vehicle’s make and year.  For instance, a 2017 Ford Taurus costs roughly the same to insure as a 2017 Chevrolet Malibu, but a 2010 Ford Taurus is $17 cheaper to insure per month than a 2010 Malibu.
  • Out of production cars that are still on the market can be less expensive to insure.  Let’s look at the Mazda Protegé – with fewer of them on the road, the less they are getting into accidents, making that vehicle less risky to insure.

Understanding how insurers make their premium calculations can help a new driver save on their bottom line. The age of the vehicle, its safety, value, history of accident claims, the likelihood of being stolen and involvement in product recalls all factor into the premium being charged to the driver.  The more points a new driver can score with an insurance company, the less they have to pay.