Auto insurance is something that is required by millions of drivers, and every driver is unique. This widespread need for car insurance policies has made it extremely complicated, especially when it comes to pricing.
People may have noticed that the way car insurance is priced is drastically different from every other service or product available in the market; auto insurance rates are diverse and dynamic.
Different and dynamic means that auto insurers charge other people different rates for the same car insurance policy, and by evaluating certain factors, car insurance rates keep changing for the same person.
Multiple factors affect the rates of auto insurance. So, where does the make and model of your car come in? Out of the dozens of factors that affect your insurance rates, what effect does your car’s make and model have on it?
In this article, we’ll dive deep into the ways car insurance rates are determined, the type of car you drive and how it affects your insurance rates, and all the ways you can cut down the costs of auto insurance. Let’s get started.
How are Car Insurance Rates Determined?
Auto insurers go to great lengths to determine the risk of a car accident (and an insurance claim) associated with the policyholder. A proper risk assessment and policy pricing are the only way for an insurance company to stay afloat.
Car insurance providers consider a dozen different factors that estimate not only the likelihood of a policyholder making an insurance claim but also the cost required to repair the car or reimburse the entire cost of it in case it gets totalled.
The standard and significant insurance price determining factors include:
- Driving record
- Past insurance claims
- Locality
- Age
- Gender
- Credit score (in some states)
- Make and model of the car
- Other internal factors
The final result of this risk assessment is to check if the policyholder is a high-risk or low-risk individual. People who are more likely to be in a car accident are charged more for car insurance to offset the risk of an insurance claim.
But in all of these factors, where some make sense and others entirely don’t, where does your car’s make and model come in? How does that influence the pricing of your policy? Let’s take a look at the answer.
Why is the Make and Model of the Car a Factor?
It is plain to see why car insurance companies would consider driving records or past insurance claims while deciding the price of the policy. How a person drives a car shows a lot about the possibility of a future accident.
But how does “what” a person drives become a factor in assessing the risk? The make and model of the car are considered not to determine the “risk” of the accident but the “cost” of the repairs the insurance company has to bear after the accident.
Before we get into the details, let’s look at the car insurance policies that are affected by the make and model of your car.
Collision insurance: Collision coverage is the policy that covers the cost of repairs needed by your car after you get in a road accident. It can be claimed in any accident that involves a collision, meaning that even if the fault was yours, you could claim this policy.
Collision coverage pays for the repairs of your car, or if the vehicle is totaled, it will reimburse you.
Comprehensive insurance: Comprehensive coverage pays for the repairs needed if your car is damaged while it is parked. Damages due to natural disasters such as fire, floods, earthquakes, hurricanes, hailstorms, etc., are included in this policy.
Other damages such as damage due to projectiles, riots, vandalism, and even theft. If your car gets stolen, you can claim comprehensive insurance. The auto insurer will pay the actual cash value of the vehicle.
How Make, and Model Affects Car Insurance Rates
When someone buys car insurance from an insurance company, the auto insurer becomes liable to pay for the repairs and reimbursement of the car. Since every vehicle is different when it comes to repairing costs or MSRP, car insurance companies need to price their policies according to the make and model of the car.
There are four significant factors auto insurers consider in the make and model of the car:
- Vehicle cost
- Theft rates
- Engine and vehicle size
- Repair costs
All these four factors are correlated to each other. Let’s take a look at what these factors contribute and how.
Vehicle Cost: Expensive cars are usually expensive to repair, difficult to find, and more likely to be stolen, and most importantly, if the vehicle is totalled, the insurance company will have to pay a hefty amount to reimburse the policyholder for the loss.
Theft Rates: Some cars are stolen more often than others. For example, the Ford F-150 is the most stolen car in the US. So auto insurers charge more to insure Ford F-150 than others.
Engine and Vehicle Size: Large vehicles such as SUVs have a higher road accidents rate than smaller, compact cars. Similarly, vehicles with bigger engines (and more horsepower) are more expensive, faster, and have a higher chance of a road accident.
Repair Costs: Expensive cars, large cars with larger engines, are costly to repair. Foreign vehicles are even more expensive to fix because they have a limited number of authorized service centres, and the spares are as costly as a small car.
Saving Money on Auto Insurance
After seeing all the different factors that come from the make and model of the car, it is evident that if someone wants to save money on auto insurance policies, they must steer clear of large, expensive, imported cars.
The best way of paying less for auto insurance would be by getting a small, compact, locally-made car that is easy and cheap to repair. But what if you already have a big expensive car?
Before you choose an auto insurer, make sure to compare all the options you have. For example, if you live in Illinois, look for cheap Illinois car insurance and select the one that suits your needs the best.