Reader’s Question:

How does model of cars can affect my auto insurance rate?

Pam

Cambridge, MA

Sports car are normally charged by car insurance companies with relatively high insurance rate. The reason behind this is that sports car is usually driven in speed that usually cause traffic accidents and crashes. The high chance of traffic accidents to occur also poses high chance of paying cost than earning. However, sports car insurance rate is not fixed to all types of SUVs. There are other SUV models that car insurance companies charge more than the other model. This is because there are certain models of SUV or car in general that are likely to file claims. In this case, don’t be surprised if you find out that the car insurance company that offered you sports car insurance rate offered lower to your friend whose car is also an SUV.

a. Certain models of car are more attractive to thieves and likely to be stolen while others are prone to collision or get vandalized. Car insurance companies, as a result, compensate the risk by making the car insurance rate higher.

b. In the event of traffic accident, repairing expensive cars can be costly. It follows that expensive cars has also expensive parts. The risk is then passed on by car insurance companies to car insurance premium that they offered to customers.

Car insurance providers get statistical data from Highway Loss Data. An example of this statistical data include the average amount that car insurance companies pay from claims because of collision, theft or injury according to the type or model of cars. Aside from this information, car insurance companies also use their own claims experience. Certain models or types of car receive more claims than the other. In this case, those that file claims more often are charged with higher car insurance premium. So next time you think of buying a new car, consider the type and model.