Buying a new car comes with, of course, new auto insurance. And most people just assume that a new car automatically means a lower insurance payment. But it actually will almost certainly mean higher premiums. Here's why, and how to avoid it...or, with the right decisions, at least lower what you'll pay.
The Value - It's pretty simple: a new car is worth more than the 10-year-old junker you're going to be trading in to get it. As a result, insurance companies are going to have more financially on the line than they were on your old car, and that's a cost you're going to help mitigate with more money every month. There's not much you can do to offset this, unfortunately: your car is just worth more. So, even if you follow every other tip on this list, you still might wind up with higher premiums.
The Collision Rider - If you buy a new car, you will almost certainly be required to get, and pay for, collision coverage on your policy. In fact, you should probably be suspicious of an insurer who doesn't want you to buy collision on your new car. Used cars may not be required to have collision because of their low value, but new cars are always worth enough to make collision a requirement.
The Type - It's basic car insurance math: if you get a type of car that's in more car crashes by percentages, you're going to pay for it. Obviously, most of us don't turn in a minivan for a sports car, but even switches from, say, an SUV to a sedan can have accompanying price increases in insurance, just because sedans get into more, and more dangerous, wrecks. Check with your insurer about what types of vehicles get lower rates; as we've noted before, minivans and SUVs generally have the lowest rates due to their safety.
The Repair Costs - How cheap is it going to be to fix your car? It's a pretty important question, because many insurance payouts center around something going wrong internally. How much is it going to cost for a mechanic to get under the hood? This can be made cheaper by, say, getting a warranty or a service plan, if it makes sense for you financially.
The Safety Features - One thing that will work in your favor is the fact that your new car will likely have more and better safety features; every year, car safety improves, and previously optional features become standard. That said, look closely at the safety options you're getting. Often, insurance companies will lower your insurance to at least off-set the cost of getting it, since, the safer the car, the less liability they'll have to pay.
The Popularity With Thieves - Even with car theft at some of the lowest rates ever, and cars harder to steal than ever before, car theft still happens. If your car is popular with thieves, it's going to raise the cost to insure your car.
How to anticipate these costs? Call ahead. Get your agent on the line, lay out what you're considering purchasing, and ask him what you need and what it'll cost you. Don't hesitate to shop around, either: insurers have different policies and prices, depending on the company.
But, either way, if you've been driving a jalopy for a decade and are getting a bright and shiny new car, your insurance is going up. Make sure you're ready for it.