The Link Between What You Drive and What You Pay

Posted on Oct 31st 2009, 01:30 am, under Improve Your Auto Insurance Rate

If you're dead set on owning a Ferrari or a top of the line SUV, then expect to pay dearly for it, both at the car dealership and at your insurance company. The calculation of your insurance premium is based on a variety of factors; among these, your vehicle’s price is one of the most important.

Why? Simply because if your car is stolen or totally wrecked in an accident, it will cost more to replace. Pricey cars also have a higher repair costs than the average car. Surcharges may also apply to car types that are frequently stolen, or that are often involved in accidents.

If you want to get an insider look at how insurance companies might value your car, look it up at the Highway Loss Data Institute (HLDI) [www.carsafety.org]. An affiliate of the Insurance Institute for Highway Safety (IIHS), the HLDI offers comprehensive information on theft rates by vehicle model, injury claims, and average collision repair costs. Both of these institutes are fully supported by auto insurance firms.

The HLDI lists show that the lowest injury claims come from with large vehicles, such as pick-up trucks and SUVs, while the highest claims are associated with smaller two- and four-door cars. Along with sports cars, small cars also have the highest collision costs. Therefore, if you're looking to buy the latest sports car model, you can expect a high insurance premium to go with it. 

But don't assume that SUVs are off the hook, either. Though some models have relatively low insurance costs, SUVs are more expensive than other cars. Worse, they are one of the most common targets of car theft. (The Nissan Maxima currently runs a close second to the Cadillac Escalade in the list of most-stolen cars.) In addition, SUVs cost a lot to repair, especially if the four-wheel drive is damaged in an accident.

In the end, however, rates still vary widely, and companies still set them based on their experience and individual policies. What we've described above are just the general trends in premium pricing. This is why you still have to do your research and shop around for the best rates.