Auto insurance rates vary just as much as people vary. Two different people with the same driving record and the same car might pay different prices for the same insurance, because there are many factors that go into deciding the price of the car insurance. Since it is mandatory to have a liability insurance policy, there’s no way of escaping this expenditure. But you sure can save some money in the process if you have not bought a vehicle yet. 

The type and make of your car, along with the features it comes with can drastically affect the insurance rates. So if you are looking to lower your car insurance premiums, then you should pay attention to what kind of car you’re getting. Here’s how your vehicle affects your car insurance rates...and why. 

Understanding Auto Insurance

Before we get into the connection between the cost of insurance and the type of vehicle, it is imperative to understand how auto insurance works and how the rates are calculated. Why do auto insurance companies give different quotes for the same policy? If you went to a coffee shop and saw that you are being charged more for the same latte, you’d be livid. So how come insurance companies are allowed to do so? 

This price difference is because when you are buying an auto insurance policy, the insurance company is taking your share of the risk. If you get in an accident, they have to pay for the repairs. This is why insurance companies charge more when they take more risks. People with a lower risk factor for making insurance claims get lower prices. People who are more likely to make a claim pay more. 

The same goes for the type and make of the car. Insurance companies assess all the risk factors associated with the car, and give quotes that would prevent a loss for them. Higher risks equal higher costs. But what makes a vehicle a higher-risk undertaking?

How Does Your Vehicle Affect Your Car Insurance Rate? 

When you buy a collision insurance policy or a comprehensive insurance policy, the insurance company ensures you that in case of an accident, the company will bear the entire cost of repairs (minus the cost of deductibles). But to cover the cost and to offset the risk factors, the price of insurance premiums and coverage is determined by the type and make of the car. 

Make of the Car
Usually, cars that are made locally in the country are cheaper to insure. This is because the parts are easily available, and since the car is being made locally, fixing it would also require less money. In the US, cars from companies such as Ford, Chevrolet, and Honda are locally made and can be fixed at cheaper costs. So if you damage your car, the insurance company would have to pay less...hence, you get to pay less for the insurance rates. 

Expensive cars that are imported are very expensive to maintain and repair. These cars require special garages, tools, and expensive spare parts. This is why insurance companies charge more for cars that are not made in the country, or are expensive to repair. 

Type of Car
Not just the make of car, but the type of car that you own affects the insurance rates. Now it gets a little muddy here with no clear metrics. Some studies have found that insuring an SUV costs less than insuring a sedan, even though on average SUVs cost more than sedans. But some information can be extrapolated from this data. 

First, bigger vehicles are more expensive to insure than smaller ones. Tesla Model X and Jeep Wrangler require some of the most expensive insurance policies. This is because these vehicles are meant to be driven a bit roughly, but that increases the chances of damaging the vehicle. But then why  are SUVs from brands such as Ford or Subaru the cheapest to insure? 

This is because the Jeep Wrangler and Tesla Model X (along with some other premium SUVs) are quite expensive, and they take a fortune to repair, whereas lower-priced regular SUVs are built to last long, with a stronger frame and higher ground clearance. 

Sedans are always going to be expensive to insure, because this class of vehicle is considered to be a “luxury” class. With a much lower tolerance to rough driving when compared to SUVs, and being very expensive to maintain, sedans demand expensive insurance policies. This is one of the reasons why there has been a decline in the sales of sedans. 

But if you want to save a lot of money on insurance, then your best option would be getting a small, affordable, and locally-made hatchback car. These cars are extremely popular, manufactured in high quantities (thus are cheaper to make), and come with readily and cheaply available spare parts. They are easier to repair; this results in a less expensive insurance policy. Another bonus is that they are usually gas-efficient, which means a great deal if you're heading out on a road trip. 

Features 
Vehicles with safety features that decrease the chances of accident or theft are cheaper to insure. Cars with better safety ratings, such as the NCAP crash test ratings, ESP (electronic stability program to prevent body roll), anti-theft lock, ABS, etc., all increase the safety of the vehicle. Get a vehicle with as many safety features as possible—or better yet, install these features yourself, if possible, and your insurance rates will go down.

The opposite is true for cars with more luxury features, such as a sunroof, automatic rolling down sunshades, etc. The more luxury features a car has, the more the cost of repairing the vehicle. 

Age of the Vehicle 
Newer vehicles are more expensive to insure, whereas old ones are cheaper to insure. This is because the actual cash value of the newer car is much higher than the old one. Actual cash value is the amount your car is worth in the market currently, not how much it was when you bought it. So as the age of your vehicle increases, the cost of insuring it decreases. 

By planning ahead when purchasing a car, you can definitely make smart financial decisions that can definitely impact your budget.