As your vehicle gets older and its value drops, you’d probably expect your insurance premiums to drop too because you’re unlikely to file a huge claim if the vehicle gets totaled. However, while the value of your vehicle does impact your insurance premiums, several other factors also affect your auto insurance rates. Here’s some more information on this topic.
Factors That Affect Auto Insurance
Some of the factors that determine your auto insurance costs include:
- State Mandated Minimum Liability Coverages
Auto insurance comes with various coverages. However, the two coverages that are required across most of the U.S. are bodily injury coverage, which is required in all states, except for Florida, and property damage coverage which is required in all states and Washington, D.C. Moreover, about half of the U.S. states require underinsured/uninsured motorist coverage, and a few states require motorists to have personal injury protection coverage or a similar kind of first-party benefits coverage. These state requirements, which are not affected in any way by the value of your vehicle, usually have a significant impact on your auto insurance rates.
- Vehicle Safety
As cars get older, unless they are meticulously maintained, they tend to be less safe. Stopping distance can increase, turning ability can diminish, brakes can fail, and more things can generally go wrong. This increases the likelihood of you making a claim, which can increase your rates. Therefore, the reduction in the value of your car is offset by an increase in the probability of you making a claim. In general, newer vehicles are inherently safer compared to older vehicles.
- Cost of Medical Care
Higher medical costs typically translate to higher auto insurance costs because of the medical coverage component on auto insurance policies. Therefore, while the value of your vehicle may drop over time, the amount your insurer will pay in case of an injury increases.
- Safety Features
Newer vehicles are generally safer due to new technology which improves auto safety. While not all new vehicles come with every new safety feature, obviously an older car won’t get any safety-related upgrades unless you pay for them because manufacturers don’t typically upgrade sold vehicles. This means that auto insurance for newer cars may cost less than insurance for old cars.
- Cost of Repair
Most auto accidents don’t lead to a total loss. Consequently, most claims involve restoring a vehicle to its before-accident state. The cost of repairing a vehicle doesn’t necessarily correlate with the vehicle’s age. For instance, the cost of repairing a two-year-old car may not be much different from the cost of repairing a five-year car of the same make and model.
- Theft Rate
It’s easy to assume that a shiny new car is much more likely to attract thieves than an older car. However, this is not necessarily true. For instance, if your drive a particular older car that was popular due to its reliability but whose parts are now hard to find, the chances of your car being stolen may increase. An increase in theft rates can increase the cost of auto insurance for old cars.
- Overall Liability Claims
The liability claims paid by your insurer for all their clients, can affect your insurance rates accordingly. Specifically, if there is a steady increase in the liability payouts over the years, the insurance company may adjust their rates upwards, irrespective of the value or age of your car.
In general, a cheaper or older car doesn’t necessarily mean lower auto insurance costs. If you’re looking for affordable auto insurance in Calabasas, CA, contact Burton A. Harris Insurance Agency today. We are happy to answer any questions you may have about auto insurance policy.