Many things are taken into consideration when calculating how much you pay for car insurance. Your driving history, your age, and even where you park your car can determine the cost of your premium.
But the car you drive is one of the key factors influencing how much you pay.
Comparing car insurance policies can help reduce your bill but there are a few factors that can push premiums up when it comes to the car itself.
What influences car insurance prices?
Car insurance providers have rating systems that calculate premiums according to hundreds of factors. Many of these factors are the details you enter when you complete an online quote. They include:
- age of the driver(s)
- gender of the driver(s)
- claims history of the driver(s)
- car make, model and age
- car safety rating
- car garaging address
- car value
- cost to replace car parts and make repairs.
What makes a car cheaper to insure?
Make, model and price. In general, cars with less value, low performance, and smaller engines will be cheaper to insure. This is because repairing or replacing a cheaper car after a claim will cost an insurer less. However, if you’re driving an old car with minimal safety features, this could cost more since safety rating factors into premiums.
Safety ratings. In theory, the safer the car the less likely you are to crash, or if you do crash there’ll be less damage done. The Australasian New Car Assessment Program (ANCAP) provides safety ratings for cars by testing them in serious front and side crashes. Many insurers will reference the ANCAP safety ratings when setting premiums.
While most new cars score pretty high on the chart of 0 to 5 stars, this could be something to consider in the insurance equation if you’re buying an older or used car.
Insurers interpret a higher score as though they will be less likely to have to make big payouts for car repairs/replacement or medical costs for people in the vehicle. Insurers are often more willing to insure a car with a high safety rating for a lower premium compared to models that have been deemed ‘less safe’.
Availability of car parts. If it will be difficult or expensive to source parts for the car, the premiums may jump up since repairs could cost more. Where the car is made could also impact this, as importing car parts can be costly. Australian-made cars tend to have lower premiums as the parts are easily sourced.
Some parts are more expensive due to their complexity, such as those for specialty cars; heritage cars can also be more expensive to fix.
Fuel consumption. If you drive environmentally friendly wheels some insurers may offer a premium reduction for your green habits. This is less about the risk involved in covering the vehicle, and more a means of encouraging sustainability in the industry and providers advertising they support those values.
The market value or agreed value of the car. The market value is a recognised insurance industry term for what your car would fetch on the open market at the time of making a claim.
Whereas an agreed value is a sum that has been fixed after discussion and agreement between you and your insurer when you take out or renew a policy. You will need to decide whether to insure for one or the other, so do some research or obtain a few quotes to see how they affect your premium.
Theft rate. According to statistics, one car is stolen every 12 minutes in Australia. The theft risk rating can be a big driving factor behind your car insurance premium and is determined by looking at things such as the make, model and year of the car.
Cheapest cars to insure in 2021
All in all, a lot of things are taken into account when calculating your car insurance price. However, in general, the safer the car and the lower its theft rate, the cheaper the insurance premium is likely to be.
Cars that have been awarded a better theft risk rating could be cheaper to insure.
The National Motor Vehicle Theft Reduction Council (NMVTRC) came up with the theft risk rating to identify which cars are most at risk of being stolen in Australia.
The cars with the lowest theft risk (rated five stars, according to NMVRTC’s Theft Risk Rating 2019/2020), in no specific order, include:
- Ford Mondeo
- Volkswagen Beetle
- Skoda Kodiaq
- Toyota Camry
- Citroen C5
- Ford Focus
- Volkswagen Up
- Volvo V40
- Honda Civic
- Mazda CX-5
This list could help you to identify which cars are cheapest to insure in 2021 but it is not exhaustive. Drivers need to remember that numerous factors are in play when it comes to calculating insurance premiums.
If you want to manage your car insurance budget carefully, look at all areas where you can potentially save. These could include increasing your excess to lower your premium, settling with your insurer on a lower agreed value than the higher market value of your car or considering what features you really need in your car insurance and choosing a more basic policy to suit.
It is a good idea to do your research to work out what policies may suit your needs and how much they are likely to cost you.
Do you have a car that is on the list? Did you know about the theft risk rating in Australia?
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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.
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