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There’s nothing quite like buying a brand new car. Even those of us with economy cars in mind often daydream of striding up to a dealership. We want to drive away with a luxury sports car, fresh off the assembly line. But are you ready for the sizable insurance premiums?
However, many people fail to properly account for the additional costs of automobile ownership beyond its initial purchase; namely, the costs of insuring such a vehicle. This, of course, begs a couple of questions. Which types of cars cost the most to insure? And which cars cost the least amount of money to insure?
A variety of factors can lead to sizable insurance premiums
FREQUENCY OF CRASHES PER CAR MODEL
The (NHTSA), an agency of the federal Department of Transportation, published an annual report detailing vehicles and likely accidents. Passenger cars, trucks, vans, and utility vehicles all figure into this assessment. Generally speaking, insurance premiums are higher for vehicle types which have a greater likelihood of suffering an accident.
The 2011 report published by the NHTSA helps shed some light on some of these insurance costs. Smart Cars are twice as likely not to suffer an accident in a given year, compared other types of vehicles.
BODILY INJURY CLAIMS
The NHTSA does not measure the relative safety of occupants for the variety of vehicle types in its annual report. However, insurers definitely consider the likelihood and costs of potential bodily injury claims when determining insurance premiums.
These statistics somewhat mirror those published in the NHTSA report; one can deduce a car unlikely to be involved in an accident is also unlikely to injure others. On the other hand, certain types of vehicles are designed to protect their occupants better than others.
For example, while a Smart Car may be less likely to suffer an accident in the first place, its occupants are more likely to be injured in an accident than the occupants of, say, a minivan.
There was a time where owning a Volkswagen or Mercedes meant that these cars could not be repaired at the average body shop, and required special attention from a trained mechanic to put them back on the road. Fortunately these days are coming to an end, as auto shops are better trained and have more information about vehicles available to them than ever before.
Nevertheless, an automobile insurer is usually responsible for making sure a car is repaired following a covered loss, so its best interest lies in making sure those repairs are done at the lowest cost possible. Generally speaking, the rule still applies that the rarer a car is, the more expensive it will be to repair; and thus, insurance premiums will cost more.
COSTS OF A TOTAL LOSS
Gap coverage helps to address the issue of how rapidly a car can depreciate over time.
For example, consider a person who buys a $30,000 car with a loan. Several years later the car might only have an actual cash value of $15,000, even if the driver still has much more than that remaining on the original loan. In the event that the driver’s car is destroyed after suffering a loss covered by her insurance, the gap coverage would be responsible for paying off the rest of the driver’s loan; this saves the driver from being forced to continue making payments on a car she no longer owns.
Gap coverage represents yet another reason that expensive cars cost more to insure than cheaper cars. Just as the average consumer might be wary of the sizable loan necessary to buy a luxury car, insurers are also wary of taking on those costs should those cars find themselves on the wrong end of a total loss.
ENOUGH ALREADY! WHICH CAR COSTS THE MOST TO INSURE, AND WHICH ONE COSTS THE LEAST?
Insure.com recently published a comparison of the most and least expensive cars to insure; the highlights of which were published in the New York Times. The list includes many cheaply insured vehicles including minivans, as well as automobiles which stake their reputation on being safe and/or economical.
The most expensive car to insure is the 2012 Audi R8 Spyder Quattro, a two-seat convertible that can carry an annual premium of nearly $3,400. Also on the “most expensive list” are more luxury cars (Mercedes, Porsches, BMWs, etc.) and convertibles.
Of course, measuring insurance costs by vehicle type alone is no exact science. A number of factors unique to the insurance applicant also come into play, such as the applicant’s age, marital status, and driving record.
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