Why is it cheaper? Do you get a sympathy discount for driving an ugly vehicle?

If Ever, Did you miss the headline:"For Cheap Car Insurance, Buy A Minivan"? Are you aware that a small car cannot carry five, six, seven or eight people? There are actually families that need a larger vehicle. Some drivers are more comfortable in larger vehicles. Did you know that older people find getting in and out of minivans, crossovers and SUVs easier than small cars? There are reasons manufacturers sell more than just cars.

Think of it as a cougar caller..................

Ha ha, nice!

Allison,

Granted, having worked for one of the nation's most prominent insurers for a number of years, I have a little additional insight into how this process actually works.

I understand that you have a limited amount of space to get your point across, however this is an extremely narrow view of how one's insurance premium is actually determined. Additional factors, including but not limited to loss history in the rating territory in which one lives does not simply affect the insurance premium as a whole. Within the determined premium there is a fluid scale for which the price of one's liability, uninsured motorist, comprehensive, collision, medical payments, and even roadside assistance and car rental coverage can be adjusted.

Obviously comprehensive and collison coverage will cost more, the more expensive the vehicle, as the insurer will be subjected to a greater risk. However this is not necessarily true for liability coverage, as most insurers will assign a safety rating to each vehicle as a result of loss history as determined by that company's actuaries.

Long story short, while the point you made is techincally valid, it is but a very small piece in determining what you will pay for insurance.

Who would have ever thought that insuring a $15,000 minivan would have been less expensive than a $210,000 sports car?

Um, $15,000? Have you PRICED a minivan lately? I was gonna buy one, but at well over 40k for a decent model Sienna, I went with the Honda CR-V instead. I can still fit all my musical equipment in it, and my aging step-dad can get in with no problems, but it saved me more than $15k compared to the Sienna! Now, a Kia might be cheaper, but still, $15k? I don't think so! :-)

You are correct, Matty.

Actually, the "spread" in new-car insurance prices is not as great as all that - the ranges shown all run from about $1000 to $3000 a year, which is not that great, considering the value spread of the vehicles ($20,000 to $200,000)

I researched this a while ago and came to the conclusion, quickly, that what kind of car you drive is a lot less important than the kinds of coverage you get, your age, and your driving record.

The big savings are in owning an older car and dropping collision (the "secret trick" they tout in those annoying pop-up ads). So if you drive an older car that you PAID FOR, and it is worth say, $10,000, you can drop collision and save a lot of money. On average, you might get into an accident every 11 years, and the collision runs about $1000 a year. Do the math - collision isn't worth it on an older car.

Dropping junk coverage like towing, medical (which covers little or nothing) and uninsured motorists (which either covers very little, or to get enough to be worthwhile is hugely expensive), rental car coverage, glass breakage, etc. will also cut the costs.

How much? Well, I have two cars that are worth about $10,000 each, and they run and drive like new (because I don't beat the snot out of them and know how to take care of them). And since I have a "clean" license, the insurance is $15 a month per car. That's $360 a year, period. A lot less than a minivan.

The two cars are a BMW M Roadster and a BMW X5. Paid for, cash, secondhand. The roadster has only 36,000 miles on it. Worth maybe ten grand - about half that of a new Focus. And who gets the looks at the stop light? And yea, people say "Is that a new car?" and freak out when I tell them it is 13 years old. Keep a car in a garage and it will last forever. But so many people keep junk in the garage and park their cars outside. Go figure.

That is where the real savings is, not in trying to pick a car type for cheap insurance.

I see a lot of poor people pay a LOT for car insurance as they buy new cars on time and then drive very badly (speeding, tailgating, running stop signs, aggressive driving, etc.). They don't get anywhere any faster, but they jack up their rates into the stratosphere. And yea, when I was younger, I was that stupid as well.

But I realized I'd rather have a real nice car and pay a lot less money for it.

Most Americans are paranoid about losing what is parked in their driveway, but fail to see the bigger picture - they they are losing far more, every year, in buying brand-new cars and paying top dollar for insurance.

People chase after pennies and let the dollars slip out of their fingers. And articles like this are a case in point. People buy brand-new cars and then try to save a few hundred a year on insurance - when they are losing $10,000 a year in depreciation!

Penny-wise, pound-foolish.

We pay way less for gas than you do in Europe, so it evens out.

And before you say, "Well, we can't afford to pay cash for a car, we have to finance one!" let me point out that you are paying 3-5 times as much to ride as I am.

The argument is really the other way around - I can't afford to live like you do - squandering money on car payments and high-buck car insurance.

And if you want to drive a low-miles M Roadster, they are out there, all day long, kept in garages and babied. Worth about ten grand - less than half that of a new Focus.

It is all about choices, plain and simple.

Robert,

You are pretty much on the mark with your analysis. I agree with you on Med Pay, and we are in the same neighborhood on car rental and towing. I have a differing perspective on Uninsured Motorist coverage, especially in cities where driving uninsured is an epidemic. I have seen this coverage bail people out on countless occasions, however you and I could go on and on about that, and bore everyone here.

Essentially, I think you and I could have collaborated for about 5 minutes and written an article that would have been far more comprehensive and helpful to readers.

I hear you. But what uninsured motorists does is allow you to sue your own insurance company.

For what? Pain and suffering.

Say you are hit by someone who is uninsured, underinsured, or hit and run.

Your car is totaled. If you have collision, it is covered under that. If it is an older car, you don't care. Either way, you don't really need the uninsured motorists coverage.

Your medical bills? Covered by your health insurance (which, since I don't have uninsured motorists coverage, I can actually afford). So again, uninsured motorists doesn't really help me here.

What does that leave? Disability? Get disability insurance (also expensive because people end up suing their own insurance companies claiming bogus disabilities).

Your life? Get life insurance.

But $25,000 of uninsured motorists? It makes my lawyer happy, but that's about it. If I am hit by some clown, 25 grand isn't going to make a huge difference in my life. Maybe it would buy me that electric wheelchair like Captain Pike has. But that's it. Why bother with trivial amounts of uninsured motorists coverage?

A million dollars worth of coverage would be worthwhile, I suppose. Guess what? I'd have to sell the car and walk to afford that.

Most people are over-insured on very long-shot propositions. They pay so much in insurance premiums they cannot afford to live.

But the fender on their car is insured and the windows on their house are insured. Is this a valid cost-benefit analysis?

And when they wreck their car, they tell you what a great experience it was, like a spa vacation - they got a free rental, and a new car, and a.... etc.

Myself, I'd rather live life and take some calculated risks than insure the snot out of everything and be broke all the time.

Uninsured motorists just didn't add up, for me anyway.

But lawyers love it. I attended a legal seminar put on by a P.I. attorney, and they like the uninsured motorists coverage, particularly if you can "stack" it and collect more.

So you get this insurance and it all goes to lawyers anyway.

I just don't get it!

I wrote about this a year ago in my blog:

http://livingstingy.blogspot.com/2011/03/cheapest-car-to-insure.html

What surprised me was that some SUVs were cheaper to insure than a beige Buick Century (which I thought would be the cheapest).

Also what surprised me was how narrow the spread was in pricing between makes and models of cars. They are all about the same.

Your driving record and miles driven makes a far bigger difference.

Getting basic liability (and an umbrella) and then dropping the rest is the best bet. Your biggest risk is being SUED, not in losing a car.

My conclusion, anyway.

Here is the article in its entirety:

THURSDAY, MARCH 10, 2011

Cheapest Car to Insure?

You might think that a beige Buick is the cheapest car to insure, as the type of driver who owns one is going to be the type who drives slowly and carefully. But it isn't that simple, as it turns out.

So you want to get a new car. And if you're reading this blog, you want to save money. And of course, the best way to save money is to buy a lightly used, late-model car with about 30,000 miles on the clock. You'll save at least 30% off the price of a new car, perhaps more. And it will last nearly as long, if not longer, particularly if you take care of it.

But of course, there are other expenses with owning a car, and for many folks, the largest secondary expense (in addition to the depreciation) is auto insurance.

No doubt, you've seen the annoying ads on the Internet about the "secret trick to low insurance rates!" and wonder what that is all about. Turns out the secret is no secret at all. If you own a car that you can pay cash for, you can drop collision and comprehensive coverage and save a bundle.

And if you drop uninsured motorists insurance coverage, as well as the $10,000 medical coverage, and junk coverage like towing and glass, well, you can save even more.

How much more? Well, I pay about $31 a month to GEICO to insure a 2002 BMW X5 and a 1999 BMW M Roadster (with only 30,000 miles on it!), or about $372 a year. You really can't get much cheaper than that.

And yet, many people pay hundreds and hundreds more a year, putting collision and comp on $3000 cars, which, if wrecked, will pay out hardly more than what was paid in, in premiums, perhaps less. If you can't afford to walk away from what is parked in your driveway, you own too much car for your income bracket, period.

But assuming you are buying a late-model used car, which can run from $10,000 to $20,000, you might want to have collision insurance, at least for the first couple of years. And if you have to borrow from your credit union to buy it, then you have to have collision insurance.

So what car is cheapest to insure if you need collision? Well the results are somewhat surprising in that cars you would think would be cheap (a Buick) can be fairly expensive, and some cars you'd think would be expensive (SUVs and Jeeps) are fairly inexpensive.

Collision insurance costs, of course, are going to be determined by two factors - the tendency of the car to get into an accident, which is often determined by driver type, and the cost of the vehicle. So it is not surprising that the cheapest cars to insure are in fact, minivans. Minivan drivers are least likely to be hot rodders and reckless drivers. And most minivans are relatively cheap cars ($30,000 or less) and made in high volumes, and thus are inexpensive to repair.

New BMWs are somewhat expensive because younger people who lease them may be tempted to drive aggressively. And since they are expensive cars and parts are expensive (as they are made in limited numbers) they can be costly to repair or total out. Really esoteric rides, like Porsches and Maseratis top the list, of course. If you want to play, you have to pay.

But, I have to tell you, the best part of car ownership is when the car is older and worth less. Most modern cars can go easily 100,000 miles and many reach 200,000 miles without too much effort. It is nice to have a car - even a BMW - that you don't have to worry about so much, if it is damaged, stolen, or crashed. And paying only $31 a month for insurance is really the sweetest part.

So why do people pay far, far more for cars than I do, oftentimes to drive econoboxes? Particularly young people, who often spend more on insurance than car payments? Why do people jump off bridges? Because the vast majority are not that bright, and they value status (or what they perceive to be status) over wealth. Apparent wealth trumps real wealth for most folks.

Which brings up the most salient point about car insurance. While make and model of car may have some bearing on your cost of insurance,the major factor in determining cost is going to be your age, gender, and your driving record. You can buy the cheapest car to insure, and it won't really matter, if you have a DUI, 5 speeding tickets, and three accidents on your record, and you are under 26 years old. Insurance for you will cost thousands and thousands of dollars a year, period.

So the best way to lower your insurance rates is to keep to the speed limit, or don't go too far over, and obey the traffic laws to the letter - and drive defensively, looking out for those vast majority of idiots who are always in a hurry to be somewhere (but whose lives are so empty and pointless, you wonder why they are in such a hurry!).

And yet, we all do just the opposite, which is one reason the poor stay poor. When I was young, I drove fast, got a lot of tickets, an accident or two, and then had to pay copious amounts for car insurance. A smarter move would have been to buy a secondhand car for cheap, pay cash for it, and live without collision and comp. And if I drove normally, my insurance rates would have been somewhat reasonable.

But few young people choose to do that. At that age, we are all tempted by the shiny lights of the new car dealer, and the idea of being an "adult" and buying a brand new car. But what we fail to realize as 20-somethings is that being an adult is all about not giving into the temptation to buy things on credit. Being an adult is all about being fiscally responsible.

But alas, most of us don't learn that lesson until it is too late!

Minivans are car-based. As such, they get decent fuel mileage. Your opinion is unfounded and quite stupid.

LOL, about the additional second date cost savings. That is hilarious, it gave me a good chuckle. Thanks.