Dear Insurance Adviser,
Does buying a new car always result in a higher car insurance premium? It seems like getting a newer, safer car should bring it down. (Or maybe that’s just my wish!)
— Dreaming of a Cheaper Payment
If you trade in your $5,000 grocery-getter for a $30,000 newer, safer car and wish that your car insurance costs will go down, you probably will be disappointed. Remember, about 40 percent of your insurance costs cover theft or damage to the car. If your new car is stolen or totaled in an accident, your insurance company will owe you $30,000 instead of $5,000.
However, the good news is that your rates for the newer, safer car with side and head air bags, passive-restraint seat belts, a security system, anti-lock brakes and traction control will cost you far less to insure than a newer, unsafe car. Your liability and medical payments rates will be discounted for safety features. Plus, all your coverage rates will cost less.
Before you buy your next car, ask the crash-test dummies which cars they prefer. Every year, the Insurance Institute for Highway Safety, or IIHS, conducts crash tests on new cars. There is a strong correlation between how well a model scores on crash tests and the cost to insure it. The better the scores, the lower the insurance rates. Before you buy your next car, check out the vehicle ratings at IIHS.org. A new car that scores well will not only save you money on car insurance but may save your life as well!
Ask the adviser