Many people believe that older vehicles are more expensive to insure, but this is generally not true. Keep in mind that insurance companies base their rates on cost and risk potential. If the vehicle is less likely to garner an expensive insurance claim, the provider will charge less to insure it.
It’s true that older cars have fewer safety features and are more likely to break down. However, other factors make newer cars riskier and more expensive to insure. For starters, older vehicles are often eligible for special limited or full decal policies that only cover upholstery and glass damages. Furthermore, in the U.S., older vehicles often qualify for a “classic” category that actually means lower insurance costs. Here are some other ways that older vehicles may qualify for limited coverage or lower-cost policies.
Older Cars Are Less Expensive to Repair
Because old cars are usually less expensive, repairs are often cheaper too. For example, replacing an entire car hood on a ’76 Chevy would cost around $100 while that same part on a ’16 Chevy would cost around $350 to replace. That is because newer model cars tend to be made of more expensive materials, which is the reason why they cost more in general. Since older cars cost less to fix, insurers factor those lower repair prices into their premiums.
Older Cars Are Less Likely to Be Stolen
Old cars are less desirable than newer ones, which makes them less likely to be stolen. The insurance rates of older cars will reflect that fact. This is because the theft rate decreases dramatically as a vehicle ages, especially after it reaches 10 years old. Because the insurance company figures the risk of theft is lower, they offer a lower rate.
Older Cars Make up a Smaller Percentage of the Total Vehicles on the Road
As more vehicles are manufactured, there is a general rise in the amount of newer models that appear on roads across America. This makes older cars less common, and as such, they are less likely to be involved in collisions.
Older Cars Have Fewer Technology Features
Newer vehicles come with a lot of extra technological gadgets not available in older models. Many of these gadgets, like infotainment systems and state-of-the-art speakers, are actually quite distracting. The likelihood that a vehicle will become involved in a crash increases exponentially with more technological devices within the car. Insurers often factor this in when providing policy quotes.
The Driver Is More Experienced With Driving an Older Vehicle
Sometimes, new drivers are willing to take on more risks when driving an older vehicle. However, many old cars are owned by more experienced drivers. The chances that the driver may get into a collision are generally less with an experienced person behind the wheel of an older car. The insurance company may also consider this when determining the risk levels associated with the vehicle.
Older Cars Have a Longer Expected Lifespan
Insurance companies expect older vehicles to last longer than newer ones, and they typically assume that repairs will be needed less often. This means that insurance premiums for older cars reflect their anticipated longevity and the expected lower frequency of repair costs.
The Overall Value of Older Vehicles Is Lower
Because older cars are less valuable, the car owner won’t need to worry about expensive repairs or making sure that comprehensive coverage is included with their insurance policy. This means lower insurance rates. However, the side-effect of this is that it’s easier for a lower valued vehicle to get totaled in an accident.
Older Cars Are Driven at Lower Rates of Speed Than Newer Models
Newer cars are more likely to be driven faster. Maybe this is because of improved technology or just the excitement of getting a new ride. Either way, this means that the insurance premiums of newer cars are generally higher.
The chances of a collision occurring are much higher when the driver is speeding. This makes it even more important for insurance companies to consider these risk levels when determining policy costs. Thus people who drive older vehicles at a slower rate might be able to get better insurance rates.
Auto Insurer May Offer Discounts for Owning an Older Vehicle
Insurance companies may offer discounts for people who drive older vehicles. People who drive newer cars tend to pay more for insurance, but those who maintain older models might be able to lower their premiums even further with the help of a good discount.
Old Cars Have Optional Premium Coverage
Although comprehensive coverage is always recommended, people who drive older model cars might not need to consider this additional insurance premium when purchasing their policy.
Furthermore, there are other ways to save money on your used car premiums. Make use of used car special premium offers available. Compare the premium charged by different insurers and take advantage of special offers available to you. Insurers run promotional campaigns time and again to attract customers.
When looking for a used car, look for one with basic safety features. Apart from anti-theft devices, consider buying cars that come with some extra safety features such as airbags and ABS. Look for secondhand cars that come with better market value and lower insurance rates. Buying a used car with a high resale value that comes with lower premiums can provide you good returns on your initial investment.
Shop for a used car with low mileage. High mileage cars are likely to have been involved in an accident and have higher repair costs. Getting a detailed report on the vehicle’s VIN can help insurers take a better decision for insuring your used car as it will show them if the car has been in any accidents.
When looking for an older model, go for cars with a small-sized engine. Smaller engines are less powerful and have lower insurance premiums.
Be sure that you know what each line item on your insurance policy is. Newer car models are more likely to have wider coverage options, and you could end up paying a lot more to insure a newer car as a result. Drivers of older vehicles can take advantage of broader coverage by opting for flexible plans to get the desired benefits.
People often ask if it is true that used cars are less expensive to insure than new ones, and it is! This is because the insurance company charges you on the basis of risk and not cost. Riskier cars will always be more expensive to insure; although, rates vary from one insurer to the next based on the coverage you want.
Insurance rates will vary in different parts of the country and also in different cities within a state. When you take into account that newer cars are considered to be riskier, it makes sense that insurance premiums on used cars can be lower than their brand-new counterparts. In fact, even though there might not seem to be a huge difference in the rates, you can save a lot of money by buying a used car instead of a new one.
