How to Estimate Car Insurance Costs Before Buying

By KBB Editors 02/25/2022 4:00pm

If you’re thinking about buying a new car, it’s important to look at the total cost of ownership — not just your monthly payments — before making your purchase. That includes gas, routine maintenance, major repairs, and car insurance.

It’s not always easy to predict how much you’ll pay for maintenance and repairs, but you can estimate your insurance premium before buying a car.

Car Characteristics That Make Your Insurance Price Go Up or Down

Car insurance companies review dozens of factors to determine how much you’ll pay for a policy. Here are some of the most important criteria that will affect your rate.

Vehicle price. In general, the more expensive your car is, the higher your premium. Why? The insurance company is responsible for repairs — up to the vehicle’s actual cash value — if it’s damaged in a covered loss and you carry comprehensive and collision coverage. The more your car is worth, the more they may have to pay. So, the insurer will charge you more to compensate for their risk.
Repair costs. Cars that cost more to repair cost more to insure since your insurance company could be responsible for the repair bill.
Car’s age. In general, newer vehicles are worth more than older ones unless you have a classic car. If the insurer declares the car a total loss, they’re on the hook for the car’s current market value. The newer the car, the more they’ll have to pay.
Vehicle make and model. Sports cars and other high-performance vehicles get built for speed. Driving a vehicle with more horsepower often leads to speeding, which increases the insurer’s risk. Plus, these types of cars usually have more expensive parts, making them more costly to insure.
Car body type. A larger and heavier car can cause more damage in an accident. So some insurance companies charge higher rates for SUVs and trucks.
Safety features. Some features that make cars safer by reducing the risk of accidents, such as anti-lock brakes and airbags, may help lower your insurance costs. However, advanced high-tech safety features may increase the cost of your policy because they cost more to repair.
Anti-theft features. You may qualify for a discount on your coverage if your car has anti-theft features such as an alarm system, GPS tracking, or an ignition shut-off switch.

How to Get Car Insurance Estimates

If you want to estimate the cost of insurance before buying a new vehicle, here’s what you need to do.

Narrow Your Vehicle Selection

With so many makes and models to choose from, it’s not practical to get an insurance estimate for every available vehicle. Instead, select your top two or three choices based on your budget, available features, and lifestyle. Keep in mind the characteristics that may increase or decrease the cost of insurance when reviewing vehicle options.

Estimate the Coverage You’ll Need

At a minimum, you need to buy enough coverage to meet your state’s insurance requirements. However, that’s rarely enough to protect you from a financial loss if you’re in a severe accident. Instead of sticking with the minimum limits your state requires, consider purchasing coverage that’s at least equal to your assets. It will help protect you if someone sues you after an accident.

Remember, some coverages that can help protect you, such as collision and comprehensive, aren’t required in any state. However, they may be worth considering, especially if you have a newer vehicle. If you have an auto loan or lease, your lender or leasing company will likely require you to maintain these coverages.

Get Quotes From Multiple Insurers

Insurance companies use proprietary formulas to calculate rates, so pricing can vary significantly from insurer to insurer. That’s why it’s essential to shop around before purchasing coverage. Getting quotes from insurers is a simple and straightforward process. You can gather pricing information online; over the phone; or in-person from an insurer, captive agent, or broker.

Choosing the Right Deductible

Your deductible is the amount you must pay before the insurance company pays for a covered loss. Not all types of auto insurance coverage have a deductible attached to them. But if you purchase coverage that has a deductible, the amount you choose can affect your premium. Typically, policies with higher deductibles cost less than policies with lower deductibles. When selecting your deductible, choose an amount you can afford to pay if you need to file a claim.

How to Compare Insurance Rates

When evaluating coverage, it’s important to make sure you’re comparing policies that have the same limits and deductibles. Otherwise, you’re not comparing apples to apples. To get an accurate quote, you need to provide some information about you and your vehicle, including:

The driver’s license numbers of everyone on the policy
Year, make, and model of your vehicle
Vehicle identification number (VIN) of your car
Number of miles you expect to drive each year

How You Can Save on Your Car Insurance

The best way to find the most affordable policy is by shopping around and comparing quotes between insurers. However, it’s important to stick with reputable companies with strong financial ratings and good customer reviews.

How to Find Car Insurance Discounts

Taking advantage of car insurance discounts can help you save. Discounts may vary between insurers, so it’s essential to ask about them when applying for coverage. Here are four of the most common discounts available today.

Good student. Studying hard won’t just earn you an “A” on your next exam. It can also help you get a lower rate on your auto insurance. Many companies offer discounts to students who maintain minimum grade point averages.
Multi-policy. If auto isn’t the only type of insurance you need, you may be able to save with a multi-policy discount by purchasing more than one kind of coverage from the same insurer.
Multi-car. Insuring all your vehicles with one company may help lower your premium.
Safe driver. Safe drivers save insurance companies money. Avoiding accidents, tickets, and other moving violations will usually earn you a lower premium.

What to Keep in Mind

The car model you choose can influence your insurance premium. So, when you find a car you love, make sure to run the numbers and see if it is right for you. If you can’t afford the insurance premiums, you may need to find another vehicle.