Your Vehicle Type and Why It Matters for Auto Insurance

There are two main areas of auto insurance. Liability insurance—which includes personal and property damage, plus medical payments—covers you regardless of what car you’re driving. Collision and comprehensive coverage are vehicle-specific, and usually cover a car or truck regardless of who is driving it (as long as the driver has permission to be behind the wheel). Because of this, the price of collision and comprehensive insurance can vary greatly based on your vehicle type as well as other factors.

Safety Ratings and Equipment

One important factor insurance companies use in determining policy pricing is the relative safety of the vehicles being insured. They use various sources to figure this out. For example, the Insurance Institute for Highway Safety (IIHS) is an industry research group that rates vehicles based on safety features as well as actual performance in collisions. The National Highway Traffic Safety Administration, a bureau of the U.S. Department of Transportation, also tracks and publishes information about vehicle safety. Insurance companies consider data from these and other sources to rate the safety of each car for which they write a policy.

Besides overall “crashworthiness,” insurance companies also consider any special equipment your vehicle has that makes it more safe. This is one reason you’re asked about your car or truck’s year, make, model, and “trim level” when you get a quote for insurance. Trim level (or “trim package”) is essentially the specific configuration of standard and optional features for your vehicle type.

As an example, the 2016 Nissan Maxima comes in five different trim levels. All of them have anti-lock brakes and standard airbags. The S and SV trims don’t include any additional safety features, while the SL, SR and Platinum packages include Predictive Forward Collision Warning, Forward Emergency Braking, Rear Cross Traffic Alert and Blind Spot Warning. The extra safety equipment on the top three trims would most likely result in slightly lower premiums than the lower (and less expensive) trims.

Trim level is coded into the vehicle identification number (VIN) of the car, which is why your insurance agent will need to get the VIN for each vehicle on your policy. Some of the equipment that they’ll want to know about includes:

• Seat belts by location and type, as well as child car seat anchors
• Airbags for driver and passenger, plus curtain and knee airbags to help prevent additional injuries
• Anti-lock braking systems (ABS), which help keep a vehicle from skidding out of control
• Daytime running lights, which increase your visibility to other drivers
• Tire pressure monitor systems, to help you maintain correct tire pressure
• Rear backup cameras, which provide a video view behind you when your car is in reverse
• Parking sensors, which produce an audible warning when the vehicle is in danger of hitting an obstacle
• Theft-deterrent systems, such as alarms and recovery devices like LoJack
• Adaptive headlights, which pivot to light up curves in the road

Cost to Replace

In addition to safety, your insurance company needs to know the value of your vehicle and the relative cost to repair it.

It’s easy to understand why pinning down your vehicle’s value is so important. If your car is totaled in an accident, the insurance company needs to know how much it will cost to replace it. Your insurer may get its numbers from Kelley Blue Book, from the values published by the National Association of Automobile Dealers, or from some other source. You can generally assume that the more expensive a car is to buy, the more expensive it will be to insure.

Also, it’s important to note that some insurance companies offer “actual cash value” coverage, while others offer “replacement cost.” The difference is the adjustment for depreciation, which is the loss of value caused by the daily use of your vehicle. If you get in an accident and have to replace your vehicle, you’ll probably prefer getting a “replacement cost” check over the alternative.

Cost to Repair

Your auto insurance company will also consider how expensive your vehicle type will be to repair. Some makes and models require more expensive parts or repair technicians who need special training. Because of this, repair shops charge higher shop rates on some vehicles than on others. The cost could also vary based on the availability of parts and components, on whether your vehicle has a performance engine, or based on special features such as a turbocharger.

According to Automotive.com, the most expensive new vehicles to repair include the Dodge Viper, with an MSRP of $86,995 to $107,995 and a five-year repair cost of $2,084, the Porsche Cayenne, with an MSRP of $61,700 to $113,600 and a five-year repair cost of $2,072, and the Audi S3, with an MSRP of $41,100 to $47,000 and a five-year repair cost of $1,989.

Gone in 60 Seconds?

A final element factored into your auto insurance premium is the likelihood of your vehicle being stolen. Part of this relates to where you live , as some neighborhoods have more car thefts than others. Insurance companies also pay attention to which vehicles are stolen most often. If you drive a vehicle type that’s in high demand with chop shops, you may see a slight increase in the cost of insurance coverage.

According to the National Insurance Crime Bureau, the top ten most stolen vehicles from the most recent year are:

Shopping for Cars and Insurance

Does it make sense to pay attention to the relative cost of auto insurance when it’s time to shop for your next vehicle? Why not? If you have several makes and models that you’re looking at, you might consider talking to your independent insurance agent to find out whether one car or truck might cost more to insure in the long run. All other things being equal, the cost to insure your vehicle type could turn out to be the deciding factor in picking your next ride.