Why Insurance Matters When Buying a Car

Jordann Brown
by Jordann Brown October 5, 2018 / No Comments

The path to buying a car is one that involves hours and hours of researching online, watching video reviews, talking to friends and family, and even browsing AutoTrader. There are so many decisions to make when it comes to buying a car including whether to buy new or used, and what size is right for your needs, and how much cargo space is really enough.

With all of these important choices to make, considering how much a car costs to insure might seem low on your priority list. But the cost to insure a vehicle is worth taking the time to review because the type of car you choose could affect your car insurance premiums by as much as $2,000 per year (more on this below).

I don’t know about you, but I wouldn’t mind keeping an extra $2,000 per year in my pocket. Today we’re going to talk about how the car you choose impacts your auto insurance quotes. If you want to keep those premiums low, you’ll consider these factors before getting the keys to your new car.

The cheapest and most expensive cars to insure

First, the price point of the vehicle is the biggest indicator of the cost to insure. As a rule, luxury cars are more expensive to insure. This simple rule is derived from the fact that more expensive cars will cost more to repair and replace, while less expensive cars will be correspondingly less expensive if you need to use your car insurance. This theory is borne out in the data: according to Forbes, the most expensive car to insure is the Mercedes-Benz-S-Class Cabriolet with an average yearly insurance premium of $3,835 – that’s $319 per month!

On the other end of the spectrum, economy cars tend to be less expensive to insure. The cheapest, again according to Forbes, is the Honda Odyssey minivan, with an average insurance premium of $1,112 per year, or $92 per month. That’s a $2,723 difference based purely on the type of car you choose. So, if you’ve got your eye on the new Tesla Model S, keep in mind that your monthly payments will only be a portion of your auto expenses.

Buying a used vs. new car

There are endless discussions online about the benefits or buying a new or used car, but most of them boil down to one simple issue: cost. Buying a new car is more expensive up front, but the higher costs don’t stop there, they can also be more expensive to insure. The reason for this increased cost is similar to the issue of luxury versus economy cars: newer cars are worth more, and so will be more expensive to insure.

On top of that, most new car owners opt for comprehensive insurance coverage, which is insurance coverage that will pay to replace your car if it’s damaged in an incident that is not a traffic accident. For example, if your car was in the path of a hurricane and a tree fell on it, comprehensive insurance would cover the replacement or repair of your vehicle. Since this type of insurance extends your coverage to more perils, it is more expensive.

Alternatively, buying an inexpensive used car means you are more likely to opt for collision only coverage, which only protects your vehicle in the event of a car accident. Collision coverage is narrower coverage and is therefore much less expensive. You can use a car insurance calculator to determine how much you’ll save by choosing these different levels of coverage.

Buying a stolen car

There is one case where a used car may be more expensive to insure than a new car, and that’s if you buy a car that is very likely to be stolen or has been stolen before. The more likely your car is to be stolen, the higher your car insurance rates. Late model cars typically don’t have as many anti-theft features as newer cars, so in some cases, may be more expensive to insure. The Insurance Bureau of Canada publishes a list each year of the most stolen cars in Canada, and 8 out of 10 are models over ten years old. If you are considering purchasing an older car, double check the model against this list.
But what about buying a car that’s already been stolen? Most articles on the internet focus on how to avoid buying a stolen car accidentally, but if you intentionally want to purchase a car that was stolen and recovered, you’ll need to contact your provider for a car insurance quote in advance to find out if they’ll even insure the car. Your insurance company will likely require an inspection before purchasing the vehicle because many stolen cars are damaged.

Buying a safe car

Safer cars tend to cost less to insure because most insurance policies contain coverage for medical bills if you’re injured in a car accident. Most cars have standard safety features like airbags, anti-lock brakes, and traction control and these go a long way towards protecting you in the event of an accident.
But in today’s world of technology, most car companies have shifted from protection during accidents to the prevention of accidents altogether. Safety features like rear-view cameras, adaptive cruise control, automatic emergency braking, lane departure warning, and blind spot detection have gone beyond simple protection. Instead, these features prevent accidents from occurring – good news for insurance providers and sure to score you a few dollars off your insurance premium.

Consider claims cost

Finally, the cost to repair your vehicle is a major determinant in the cost to insure it. That’s why it’s no surprise that the most popular cars in Canada tend to also be among the cheapest to insure. Repairs for these cars are inexpensive because materials are readily available, and these cars tend to lack the advanced onboard electronics that can be costly to replace. Choosing one of the most popular cars in Canada is a sure-fire way to secure the lowest car insurance premiums.

Whether you’re buying a car for the first time or upgrading your vehicle to suit your needs better, shopping for car insurance quotes is a big deal. You’ll have to make countless decisions along the way, but before you sign on the dotted line for a car you’ll own for the next five years, follow the advice above to ensure you not only end up with an affordable monthly payment but the best car insurance premium too.


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  • Photo by Kirsi Färm on Unsplash