Before you buy that new vehicle you’ve been eyeing or downgrade to an affordable dinosaur, you may ask yourself whether older cars are cheaper to insure. And if they are cheaper to insure, why doesn’t everyone just keep driving the same vehicle for as long as possible?
Are Older Cars Cheaper To Insure?
While older vehicles are generally cheaper to insure, older exotic vehicles or makes that are frequently targeted by thieves can actually be more expensive to insure than newer vehicles. Believe it or not but thieves like a lot of older vehicles. You know what they say; sometimes they just don’t make ’em like they used to back in the day.
Join us as we delve deeper into the topic and find out why insurance rates are not always the best when you drive an older vehicle. We will go into detail about which older vehicles cost a lot more than modern cousins and how you can get the best rates.
Insuring An Older Vehicle: Tricks Of The Trade
The car insurance business is based on a lot of statistical analysis. It is based on probabilities. These companies rely upon study-data that assesses a quantified risk assessment to everything that they insure.
These insurance policies are typically graded and then financed by an underwriter according to their ratings. Therefore, if a policy is high-risk, the premium for the bond that is covering the insured is going to charge a higher premium.
Investors don’t like to gamble with their money but are willing to accept the odds if the profit for doing so evens out and fully covers their losses. By charging a higher rate on high-risk claims, the insurer can ensure that they don’t lose money.
And even when insurers have multiple claims fail due to some unforeseeable event, such as a catastrophic flood that never occurred before in the area, they are often indemnified from having to make good on these policies.
It is the unfortunate way that our legal system works. If you have enough money, you can write the laws and enforce them through the pay-to-play system.
Let’s look deeper into the factors that affect car insurance rates and figure out how to save money by dodging those notorious risky business targets.
It’s A Real Steal
Sadly enough, insurance companies charge a premium for certain high-risk vehicles. If your vehicle is one that is at high risk of being stolen, insurance companies are concerned about covering the costs of that vehicle because it is more likely to be damaged or never returned.
Criminals will steal vehicles that are older for numerous reasons. First of all, older vehicles are usually easier to break into and hotwire even if you don’t have keys.
Newer vehicles, especially high-end models, tend to have lo-jack GPS systems that help owners track down thieves. This chops a lot off of their insurance rates. After all, who wouldn’t want a brand-new BMW 7-series or M4 if it is free for the taking?
And in big cities, it doesn’t take much to steal a vehicle. All the thieves know of the hot spots where they can drive a vehicle to a chop shop and get a decent payday.
The chop shop will strip the parts off of the vehicle and possibly change the VIN numbers to resell it. While changing the VIN numbers is becoming more complicated as manufacturers are forced to put more and more VIN numbers on each vehicle, it is also a federal offense.
The second element of older vehicles is that the parts are an easier sell. If anyone is still driving an older model, they probably need some spare parts for it. They may not be able to find certain parts anymore because they’ve been discontinued.
The junkyards will all tell you that they make more money on older cars. It is a tough sell on newer vehicles because the type of customer who drives a newer vehicle tends to simply trade it in when it needs major repairs. It makes sense because they only have to pay a low monthly payment instead of out-of-pocket expenses for major repairs.
Vehicles That Are Popular With Thieves
Of course, there are a few models that are really popular with thieves. Most of these vehicles are Honda’s because Honda has a legendary reputation and a cult following.
Their vehicles are fast, nimble, and precisely built. They are a favorite of tuners and the type of people who might buy parts at a swap meet. Here is an unofficial list of the top five most stolen vehicles of all time:
- 2000 Honda Civic
- 1997 Honda Accord
- 2006 Ford Pickup Trucks
- 2004 Chevy Pickup Trucks
- 2019 Ram Pickup Trucks
Of course, like anything, the statistics keep changing. Some studies say that the Ford F-150 is the most stolen vehicle, period. It seems plausible when you consider that it is the best-selling truck of all time.
The Toyota Corolla is also high on the list, which is not surprising because it, similarly, is the best-selling car of all time. So, while the numbers are somewhat debatable, older Honda’s and full-size pickup trucks appear to be among the biggest targets.
The statistics may be based upon per volume of vehicles manufactured or based on raw totals. I believe that the true measure is in relation to the number of cars on the roads, which is difficult to assess.
Volkswagen and Ford models also are high-risk because many are easier to break into. Some of the older Golf, Rabbit, and Jetta models were ridiculously easy to break into.
They had a wire within the door that you could shimmy to pop the lock. Many vehicles had similar designs that you could open them with a thin strip of metal fashioned with a hook called a “slim jim.”
There are many studies demonstrating that thieves don’t put significant planning into their crimes. Most crimes are crimes of opportunity. They will take whatever is around when they decide to steal a vehicle.
Because a newer vehicle is likely to have alarms and other security devices, a reasonable thief will target an older vehicle. Vehicles that have car alarms attract too much attention.
How To Get The Best Insurance Rates
You really have to shop around if you want to find the lowest prices on car insurance. Companies have different risk-aversion strategies. Some insurance companies put a strong focus on the age and experience of the driver.
Other insurance companies like to look at the record of the driver and whether they are known to speed. Of course, other insurance companies may have complex risk-assessment models that take numerous factors into account and produce a grading score.
The methods that these insurance companies use is somewhat arcane. In order to be certain that you get the best rates, you should always ask what you could do to obtain a more favorable insurance rate.
Some insurance companies will ask you to install a monitor that tracks your speeds at braking and acceleration. These monitors will award you with deep discounts for not driving aggressively. Many insurance companies believe that aggressive drivers are the highest risks.
Yet, when you consider the seriousness of accidents, a lot of major accidents involve the use of alcohol. If you have any DUI’s on your record, that can jack up your car insurance rates considerably. You should contact an attorney to see if you can get the records expunged.
In addition, some states, such as New Jersey, have notoriously high rates due to the no-fault laws in the state, inter alia.
In these states, your insurance company is on the hook for coverage even if the accident isn’t your fault. This model ensures that the costs of accidents and liability are more evenly distributed but also makes safer drivers pay more than they should.
By strategically moving to another state and commuting, you can save a considerable amount on car insurance, although you may or may not pay more in fuel per month. If you have two homes already, it may make sense to choose insurance in the state with better rates.
You also have to look at the policies and see what all is covered. You don’t want the cheapest insurance if it is not going to protect an expensive investment. If the policy says that they only cover a certain amount of damages or that repairs may only be made using aftermarket parts at their contracted facilities, it may not be worth it.
And while you may consider buying an older vehicle to reduce your car insurance costs, not everyone wants to drive an older, less safe vehicle even if it lowers their rates. It may wind up costing you more in repairs. In the end, it comes down to weighing your particular costs and deciding what’s right for you.