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Car Insurance: A Higher Car Price Doesn't Always Mean a Higher Premium

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author photo by Russ Heaps June 2015

Don't assume paying more for one car than another will necessarily mean paying more for car insurance -- at least that's the advice of personal-finance website WalletHub.com. When a driver's personal factors, such as driving record and place of residence, remain unchanged, the price of a replacement vehicle isn't the only cause for higher insurance premiums.

When replacing a car, other factors actually contribute more than purchase price to a change in premium cost. Factors such as body type (sedan, convertible and so forth), car age and so on appear to mean more.

According to WalletHub's Jill Gonzalez, on average, less than 25 percent of a premium increase is the result of a car's higher price, while more than 75 percent of increased insurance costs come from these other factors.

Age Does Really Matter

Yes, vehicle age is a factor -- and not always in the way you might think. Buying a used car may actually drive up the insurance premium over the cost of insuring a brand-new one. WalletHub found that insuring a 3-year-old sedan will cost $154 more per year on average than insuring a new version of the same model: $2,829 used as opposed to $2,675 new.

The Impact of Vehicle Type

It shouldn't come as a surprise that an insurance provider might charge more to insure a sports car than a similarly priced family sedan. What might be shocking, however, is that it typically costs less to insure a crossover or SUV than a sedan of the same purchase price.

For similarly priced vehicles, here's the average annual premium comparison:

  • Sports cars -- $3,058.
  • Pickup trucks -- $2,804.
  • Sedans -- $2,734.
  • Crossovers/SUVs -- $2,474.

Where the Rubber Meets the Road

WalletHub compared the average annual premiums of 2015 models for exactly the same insurance coverage among the top five U.S. insurance companies: State Farm, Geico, Allstate, Progressive and Liberty Mutual. What it found was that sedans with varying purchase prices can cost pretty much the same to insure. In some cases, the more affordable car to purchase costs more to insure. For example, the Ford Focus SE -- with an average purchase price of $18,460 -- cost $2,763 per year to insure; that's $20 a year less than the $2,783 it costs to insure the much more affordable $16,950 Toyota Corolla L.

Although the make of car (Chevrolet, Honda and so forth) may account for cars with price tags that are hundreds or even thousands of dollars apart but still cost about the same to insure, that's not always the case. It happens among cars of the same brand, as well. At $22,110, the Ford Fusion S costs $3,650 more to buy, but with an average annual premium of $2,676, it still costs almost $100 less per year to insure than the Focus SE.

What It Means to You

Look before you leap. Always consult your insurance agent to determine the exact impact replacing a car will have on your insurance premium before buying any vehicle. Car insurance providers look at factors we don't even think about when setting a premium. Price is just one of them. You don't want to discover that your insurance-cost guesstimate was off by hundreds or thousands of dollars after you've already purchased the car.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
Car Insurance: A Higher Car Price Doesn't Always Mean a Higher Premium - Autotrader