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October 2012 - Posts - Dollar Stretcher Guest Blogger
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Dollar Stretcher Guest Blogger

October 2012 - Posts

  • Which Type of Vehicles Cost the Most to Insure and Why

    by Scott Williams

    Savvy spenders in the market for a new car know that it’s important to consider costs of ownership before making the decision to buy; however, not everyone realizes just how much goes into figuring that equation. You must account for so much more than just the price of the vehicle and gas mileage. Few consumers know that insurance premiums can vary drastically depending on the make and model of automobile you ultimately decide to buy. So much so in fact, that a little research might have you reevaluating your list of potential new rides.

    The Insurance Algorithm

    You already know that premiums are based on a variety of factors that combine to create a snapshot of the risk you pose to your insurance company. This algorithm weighs personal driving history most heavily, with demographic factors like address, age, gender, marital status and credit rating all contributing to the risk-assessment snapshot in varying degrees. What you may not know is that insurance companies base some of their rates on the claims histories of the type of vehicle you’re driving. In other words, accidents and incidents unrelated to you personally (and entirely the fault of lead-footed strangers) will have an impact on how much it costs you to insure the car of your dreams.

    Following is a breakdown of the what information is gathered from other folks’ claims histories by the insurance companies, as well as how it’s used to determine if that drool-worthy vehicle is really just an accident waiting to happen.

    Luxury Cars and Likelihood of Theft

    If your insurance company thinks your shiny new car is desirable to car thieves, you can bank on it affecting your rate. Even if you live in a sleepy little suburb where nothing exciting ever happens, higher priced cars are more expensive to replace, and your monthly premiums will reflect that. These luxury models are also more expensive to repair, and often require the use of exotic materials. Chances are good if you’re buying a new car in this category, the price of insurance may not be particularly meaningful to you. But for an unwitting college student who spots a sweet deal on a used Porsche, researching these figures ahead of time could prevent a costly mistake.

    On the List: Nissan GT-R (Average Annual Premium--$3,059), Audi R8 4.2 Quattro Coupe ($3,853), and Mercedes CL600 BI-T Coup ($4,032).*

    Sports Cars and Frequency of Accidents

    Sports cars designed for power and speed are good candidates for high premiums. Many consumers mistakenly believe that small cars offer better handling and thereby greater accident avoidance. Statistics show, however, that consumers who buy cars in the sporty category tend to be riskier (and often younger) drivers. This data is reflected in frequent and more expensive claims than, say, those of a soccer mom driving a minivan. More speed demons mean more accidents, which has unfortunate consequences for all the responsible sports car enthusiasts out there.

    On the list: Audi R8 Spyder Quattro Convertible ($3,470), Jaguar XKR Supercharged Convertible ($3,498), and the Porsche 911 Turbo Convertible ($3,549).

    Oddly enough, there are a few models in this category you might not expect to have high premiums. The Honda S2000 and Chevy Cobalt SS are much less expensive than the other sports cars that topped this list. That’s what makes it so alarming that they keep pace with luxury manufacturers in terms of insurance costs. While it’s impossible to say for certain, it follows logic that the number of young male (high-risk) drivers drawn to these vehicles for the extra horsepower they offer over similarly priced models tips the scales towards heftier insurance payments.

    Large Cars and Amount of Damage to Vehicle(s) and Passengers

    If a particular car is regularly reported for sustaining a lot of damage or has a greater incidence of passenger injuries or fatalities, it follows that its premiums are going to be high. On the other hand, large vehicles that can cause a lot of damage can be just as harmful to your pocketbook. SUVs and trucks are often the most expensive types to insure, in large part because they are heavy enough to do a great deal of damage to small and mid-sized cars.

    On the list: Land Rover Range Rover ($2,645) and Mercedes-Benz G-Class ($3238).

    New Cars and High Replacement Costs

    As tempting as it may be to purchase a mint-condition, fresh-off-the line vehicle, stop and consider this. Late model, spankin’ new cars are significantly more expensive for an insurance company to replace than a pre-owned version of the same model. That giant drop in value that the previous owner incurred the moment he drove his shiny new car off the lot not only saves you a bundle on the sticker price, but it will make your insurance costs that much easier to stomach.

    * Insurance rates listed in this article are courtesy of Motortrend.com’s “Cost of Ownership” Calculator. Specified vehicles have ranked on Insure.com’s list of the “20 Most Expensive Cars to Insure” within the last three years.

    Scott Williams is a writer and blogger for the automotive industry for Fred Loya specializing in insurance statistics. From New Mexico Auto Insurance to Auto Insurance Quotes in California, Scott Williams keeps his pulse on the fluctuating market that is auto insurance across the nation.

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