Why Do Some Cars Cost More to Insure?
Purchasing insurance is a big part of buying a new car. In some cases, it can be a deciding factor on which car to buy when shopping around. If the insurance cost for your first choice car is substantially higher than the cost of insurance for your second choice you may have to go with the next best thing. Why do some cars cost more to insure?
The truth of the matter is that insurance costs vary from car to car and driver to driver based on a variety of factors, including risk of theft as well as the make and model of the car. Before deciding which new car to buy (or lease) it's a good idea to contact your insurance company and compare car insurance premiums. This way you can factor insurance costs into the overall monthly cost of owning the car with other expenses such as gas, the loan payment, maintenance, and parking.
Here are three factors that help calculate the cost of car insurance in Canada:
Likelihood of theft
If your car is more likely to be stolen, your insurance premiums will be higher because the odds of the insurance company having to pay you are higher. Insurance premiums are calculated on risk. The higher risk to the insurance company has to take, the more they're going to charge you to insure the car.
Here's a list of the most stolen cars in Canada from the Insurance Bureau of Canada, with Ford F350 being at the top of the list.
The make and model
This should go without saying, but it costs more to insure a Lexus than it does a Honda. Why does it cost more to insure? Because the more expensive of a car you want to drive the higher insurance premiums you're going to pay. If you're driving a luxury car that will cost thousands of dollars to repair if you're in an accident, or if you're driving a sports car where speed (and potential accidents) can be tempting, then you're going to pay for it because those cars cost more to replace or repair.
According to Bankrate, low key, family cars such as four door sedans and mini vans have lower insurance premiums: "[I]f you want to cut your auto insurance premiums to the bone, stay away from small, fast cars."
Year of production
The older the car, the cheaper it is to insure because the less expensive it is for the insurance company to replace the car (or pay out the equivalent in cash) if it's damaged or stolen. This is a major factor that helps determine the cost to insure a car. If you want to buy a brand new car you'll have to pay for it when you get your car insurance.
Car insurance premiums may be calculated based on a variety of factors, but it doesn't mean that all insurance providers are created equal. If you're purchasing car insurance for the first time or if you're policy is up for renewal, remember to shop around to find the best rates.