Is Insurance Cheaper on a New Car? 

Drivers shopping for new cars frequently ask if insurance is cheaper on a new car. Usually, the answer is no. In most cases, drivers pay less to insure old cars than they pay to insure new cars.

To help you understand how your car purchase will impact your auto insurance, here’s a look at why new cars are usually more expensive to insure and some tips for minimizing car insurance costs. 

Request a free quote from GoAuto Insurance to compare rates for different makes and models. 

Reasons Car Insurance Is More Expensive for New Cars

Car insurance companies use several factors when calculating car insurance rates. Some of those factors are related to the type of vehicle you’re driving. New cars usually result in higher premiums because of: 

• Replacement value. If your car is totaled, your insurance company will have to replace it. Because of this, the value of your car is a major factor when it comes to setting insurance rates. New cars are usually worth more than used ones, resulting in higher premiums for drivers. 
• Depreciation. Cars depreciate at an above-average rate during their first year. In fact, a new car depreciates the minute you drive it off the lot. After purchasing a new car, many drivers are left with a loan that exceeds the value of their car. When this happens, drivers have to carry gap insurance to cover the “gap” between the amount owed and the value of the car. This leads to increased insurance costs. 
• Higher repair costs. New cars have more technology than older cars. While this makes them safer and improves the driver’s experience, it also makes them more expensive to repair. Repairing cameras, sensors, and touchscreens requires expensive parts and technicians with specialized skills. To cover the increased repair costs for new cars, insurance companies charge higher insurance premiums. 
• Risk of theft. New cars are more attractive to thieves. They stand out more than older vehicles and are worth more. Theft and vandalism lead to insurance claims. Even if a car is recovered, it is often damaged and in need of costly repairs. Insurance companies compensate for this risk by raising insurance rates. 
• Increased insurance requirements due to financing. Drivers are more likely to have a car loan for a new car than an old one. Most lenders have specific financing requirements, including comprehensive coverage and collision coverage. Carrying additional coverage leads to higher insurance costs for drivers. 

How to Reduce the Cost of Insuring a New Car 

While new cars generally mean higher insurance costs, there are a few things drivers can do to make insurance on a new car affordable. For drivers considering a new car, here are some tips to minimize insurance costs. 

• Purchase a vehicle with enhanced safety features. One benefit of new cars is that their enhanced technology often makes them safer. Features like automatic braking, lane assist, and collision warning reduce the risk of an accident and can lower insurance rates. 
• Purchase vehicles with anti-theft devices. Some new vehicles offer anti-theft devices like immobilizers and GPS tracking systems. This helps minimize the risk of theft and makes vehicles more affordable to insure. 
• Compare rates for different models. Some makes and models of vehicles are more expensive to insure than others. If you want a new car, compare the rates of similar models to see the different insurance costs for each one. 
• Compare rates from different companies. Each car insurance company has its own system for setting rates. Different companies value risks differently. Before purchasing insurance for a new car, compare car insurance rates from at least three different car insurance companies. 
• Increase your deductible. Drivers who want to minimize annual premiums can increase their deductible. This means that they’ll pay less annually for car insurance, but they’ll pay more out of pocket for each claim. Some lenders have specific limits on how high the deductible can be, so always check that before raising the deductible on your collision or comprehensive insurance. 

Contact GoAuto for a Free Quote

If you’re shopping for a vehicle, GoAuto can help you create a car insurance policy with the coverage you need. Contact our team today to get a free quote or learn more about how the make, model, and age of your vehicle impact your rates. 

Call us today at (833)700-0000 or request a free online quote to get started.