Buy a More Expensive Car? You May Be In for an Auto Insurance Surprise

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

Rest assured, a higher-cost car doesn’t always cost more to insure. Find out why drivers may be in for a pleasant surprise after upgrading a vehicle. [[{“value”:”

Buying a new car can come with big financial changes. For those who take out a car loan, for example, more money could end up coming out of the bank account each month for payments to the lender. There’s also auto insurance to consider.

When purchasing a costlier vehicle, it’s natural for drivers to assume their insurance premiums will skyrocket. After all, if a car costs more to purchase, then an insurer would have to pay out a lot more money if the vehicle was stolen or declared a total loss. Plus, a more expensive car seems as if it may be a more attractive target for thieves, which could increase the risk of a claim.

However, drivers who believe their costly new car will be a lot more expensive to insure could actually be in for a pleasant surprise. Here’s why.

An expensive new car may not raise insurance premiums by as much as expected

The good news for those upgrading their vehicle is that purchasing a car with a significantly higher price tag may not send premiums skyrocketing.

I found this out myself not too long ago when I bought a new car that cost three times what my old one had (I needed a much bigger vehicle to accommodate my growing family). Despite the fact my car cost so much more, my auto insurance premiums increased by only $81 a year.

There’s a very simple reason why auto insurance premiums aren’t always going to jump up by huge amounts after buying a more expensive car. Insurers don’t just consider the price of the vehicle when they decide how much to charge to insure it. They take the big picture into account, including the likelihood they will have to pay a claim.

More expensive cars have better safety and security features

Often, expensive cars come with features that actually reduce the chances of a crash or a theft. The car may come with advanced safety features (like back-up camera or lane assist technology) and extra anti-theft protections. Those added features reduce the likelihood the insurer is going to have to pay out anything at all.

Insurers often provide hefty discounts due to these additional protections. For example, an anti-theft system could reduce premiums by around 23%. And simply having a new vehicle instead of an old one can also earn drivers a discount of around 15%.

Collectively, these discounts can mean premiums don’t go up much, or even at all, despite upgrading to a vehicle that has a higher market value.

Always get insurance quotes before buying a new car

While costly cars with advanced safety technologies may not come with big insurance premiums, it’s not necessarily the case that every expensive new car is going to be cheap to insure. Some may have a big price, but not many insurance-friendly features.

Drivers who want to be certain their premiums will remain affordable after upgrading their vehicle will want to compare insurance quotes before buying a car. Car insurers give price estimates based on vehicle make and model, so get some quotes with different vehicles under consideration to find out what insurance will cost.

Discovering that one preferred model costs a lot less to insure than others is an important fact to know before making a commitment to buy.

Our best car insurance companies for 2024

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

“}]] Read More