Most people understand that the type of vehicle they drive impacts car insurance premiums. But not everyone knows that there are times it can have a bigger impact than others.
If you’re shopping around for a new vehicle, there a few scenarios when you’ll probably want to be more selective about the type of car you choose, and knowing when and why vehicle type will impact you most can help you make more informed choices—about what type of car you buy and when obtaining insurance quotes. If you identify when any of the three classifications, you’ll probably want to take your time when shopping for a car so that you can receive multiple insurance quotes comparing vehicle type and different coverage options.
1. Drivers under the age of 25.
• If you’re looking for a car and you’re under 25, you’re going to pay higher auto insurance premiums regardless of driving history. Statistics repeatedly show that drivers—particularly male—under this age have the highest incidence of claims, accidents, and violations. There are different guidelines about age depending on state and insurer, but on average, state insurance laws usually state that all drivers—regardless of gender—under the age of 25 are to be rated as ‘youthful drivers,’ unless married before the age of 25 or unless the driver has dependents.
• If you have the double whammy of being under 25 AND having a less-than-perfect driving history, your auto insurance rates will be the most impacted.
• Avoid having an auto loan, buy a car with cash if possible so you can avoid the requirement of insuring your car with collision coverage. Collision coverage accounts for a significant portion of your auto insurance premium, so if you really need to save money or can’t afford premiums as they are, then this is a place to cut coverage. Depending on where you live, it could save you thousands of dollars a year on your car insurance.
• Your other option, although perhaps not the most ideal, is to forgo having a certain type of vehicle until you’re no longer considered a ‘youthful driver.’ Buy a vehicle that’s cheap to insure in general, like a four door Honda Accord, buy it outright so you don’t have a loan and can just carry liability, then when you turn 26 and/or are no longer considered a youthful driver, you can spend your subsequent savings on the vehicle of your choice.
• If you can’t buy a car outright and have to have a loan, make the largest down payment possible so that you can own the vehicle as soon as possible. The reason for this is because when you have a lienholder, you’ll typically not only have to carry certain coverages, like collision and comprehensive, but the lienholder will also tell you what deductible to carry. As usual, the higher your deductible, the lower your premium, but if you’re locked into a particular deductible you may be eliminating chances to save. Just increasing a $250 deductible to $500 can reduce premiums from 15 to 30%.
2. Drivers with a DUI or other major violation.
• You could be even more impacted than the driver under the age of 25 with tickets if you have a DUI/DWI. In this situation, you may want to seriously consider buying a car outright versus having a loan.
• Avoiding carrying collision coverage on your insurance will save you thousands, which you can bank (or at least break even from) to use on a future purchase AFTER the DUI is off your record.
• Consider buying a cash car and keeping it until your DUI/DWI is over five years old. After five years, most car insurance companies do not surcharge you for having a DUI.
• Depending on what your punishment was, some DUIs will affect premiums greater than others. Suspended or restricted drivers licenses or having to install a breathalyzer kit in your car could also affect premiums and eligibility.
3. Elderly drivers—regardless of driving history.
• While it’s true that elderly people definitely aren’t receiving insurance quotes always comparable to the insurance quotes of youthful drivers, premiums do begin to circle back around at a certain age. Like many other things in life, auto insurance rates revert back to parallels of being younger once you’re more than just an ‘experienced driver.’
• Look for mid-sized four doors that aren’t high on the list of stolen vehicles, or stick to a car you can pay for in full so you don’t have to buy collision coverage. At this point in life, hopefully you’ve got significant savings or have good savings habits so you can put some money away in case the vehicle is damaged or totaled.
Regardless of what category you fall into—and hopefully you don’t fall into any of them—there are a few things you should consistently do when getting auto insurance quotes:
• Once you narrow down your choices to three or four options, get insurance quotes for each so you can decide which one is the best fit for your budget.
• Provide the VIN’s of each vehicle when getting auto insurance quotes. This will provide you with the most accurate estimate since VIN numbers pull very precise information about vehicles. There can be HUGE differences between two different models of Mercedes that you may only see a few visual differences in. Additionally, VINs tell insurers information about the vehicle’s past, such as if it’s ever been in an accident. Few are aware that this can actually impact rates and sometimes even eligibility—if an insurer discovers a car was once deemed a total loss and has a salvage title, this effects eligibility.
• Even if an insurer doesn’t suggest it—ask for auto insurance quotes with different liability options. Get your first quote with whatever liability limits you typically carry and a second quote with limits that are the next ‘step’ up. So if you carry 50/100/50, get one quote with those limits and another quote at 100/300/100. Often insurers won’t suggest this to you in fear that insurance quotes will sound too high, thus risking a sale, and when you’re getting auto insurance quotes online, you need to know to do this on your own. You’ll discover that often it’s a matter of a few dollars annually to get $50K to $100K more in coverage.
Follow Desiree on Twitter @DesireeBaughman.