Do Older Cars Change Insurance Rates?
You probably know that many factors contribute to the price you pay for car insurance. These factors include your driving history, how often, and where you drive, in addition to the type of vehicle you drive. Your car’s age can impact your insurance rates too.
Sometimes older cars will be cheaper to insure than their more recently built counterparts. Other times, driving a newer car will help save money on your insurance. Let’s take a closer look at how your car’s manufacture date affects what you pay for auto insurance.
What would make an older car cheaper to insure than a newer model?
It’s common for car owners to skip paying for collision and comprehensive insurance coverage as their vehicles age, making them cheaper to insure. Your car’s depreciation in value over the years could mean that you’re eventually shelling out more in premiums than your car’s total replacement cost.
The point at which it makes financial sense to stop paying for collision and comprehensive coverage will be different for each older car. Remember the most your insurance company will payout in the event of a claim is the value of your vehicle minus your deductible. If your deductible is $2,000 and your car is worth $2,500, it’s probably not worth paying for collision and comprehensive insurance if the premiums you pay are close to or over $500 per year.
Collision insurance helps pay for damage to your car caused by an at-fault accident, whereas comprehensive coverage insures your vehicle for damage incurred by perils such as theft, weather/environmental hazards, and vandalism. Owners of newly minted vehicles are often more concerned with protecting their investments from these hazards than people who drive older vehicles.
More common reasons why an older car would cost less to insure, include:
- Even if you have collision and comprehensive insurance coverage, older cars are generally less expensive for your insurance company to replace.
- The technology used in a newer car will likely be more expensive to fix and replace if it’s damaged. For example, damage to high-tech equipment like blind spot sensors, GPS systems, or parallel park assist will require specialized repairs to systems that don’t even exist in older vehicles.
- If your older car has similar safety features as a newer model, then the older vehicle will likely be cheaper to insure than a comparable new vehicle.
If you have been driving your older car since it was new, that could also help you receive additional discounts on your insurance rate. As an experienced driver with a good driving record, you’ll likely be paying less for insurance than a young driver who just received a brand new car as a graduation gift. If you’ve taken good care of the same vehicle for years, that’s also proof that you’re a responsible car owner who deserves a lower insurance rate.
There are other underrated reasons why you might notice a drop in your auto insurance rate over time. Older drivers can also be less expensive to insure if they’re retired and only drive their vehicles recreationally, rather than commuting to work every day. If you’re an empty nester, you can also save on car insurance because your children are less likely to be driving your car and increasing your premiums.
Why would an older car be more expensive to insure?
Sometimes, the parts an older car needs to stay running are no longer in production, making them hard to find. However, if your older vehicle is a standard model made by a popular manufacturer, that isn’t likely to be an issue.
Here are other important factors that could be making your insurance rates rise if your car has driven around the block more than a few times:
- Collector, classic, antique, and vintage cars can be more valuable than newer vehicles, which means they would be more expensive to replace, repair, and insure. Classic car insurance is a separate kind of auto insurance, so it can be more expensive than regular coverage.
- Newer cars with more advanced safety features will often be cheaper to insure than older cars that lack similar safety technology. Modern safety features like automatic emergency braking, lane departure warnings, and rear-view cameras help reduce the likelihood of car accidents. A decreased risk of collisions helps lower your car insurance rate.
- If your vehicle’s age has made it more susceptible to break downs, this could also make it more expensive to insure. You may want to add roadside assistance to your car insurance policy.
Your car’s age is just one of many factors that determine your insurance rate. When it comes to calculating your premiums, your insurance company will prioritize safety and the value of your ride over how long it’s been on the road. When in doubt, it’s best to contact your insurance provider to discuss how driving an older car will change your insurance rate. You might find out that your reliable old car has been saving you more money than a flashy new upgrade all along.
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