Why is car insurance more expensive based on age than value?

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Question caused by Jason Santos: Why is car insurance more expensive based on age than value?

I am trying to shop for a new car but I want to know if I can manage the monthly expenses such as insurance and gas. I am interested in the 2011 Nissan Altima 2.5 S Coupe the Kelley Blue book value for the car is $ 17,000. The car has really good gas but I was shock to see the estimated quote for car insurance to be over a $ 100 a month. I was also interested in the 2008 Lexus IS 250 and the Kelley Blue Book value is $ 21,000. The gas for the car is okay but not as good as the nissan but the estimated car insurance quote to my surprise was only $ 45 a month. That doesn’t really make any sense shouldn’t it be more expensive since the car is worth more?

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Best answer:

Answer by CommonSense

Simple, RISK! The insurance companies can prove and predict their risk based on age, model of car, etc… You never studied business statistics in college?

Answer by mbrcatz

There are two parts to car insurance – the part for the damage to your car, which obviously is limited, to the value of THAT car, and the part for the damages you do to everyone else, in every accident you might have during a year.

You can only total your car once. Theoretically, you could have more than 300 accidents during that policy year, each of them paying out the policy limit.

Because of that, liability insurance has a much higher potential to pay out more money.

Also, cars depreciate the most, the first four years. After that, they depreciate much more slowly. Also keep in mind, insurance doesn’t pay out RETAIL value.

Liability insurance, should pretty much cost the same, regardless of what vehicle you have – the only differences would be for safety devices like airbags, which are pretty standard on most newer cars. Physical damage is the coverage where you can see a lot of value, and you’ll see MOST of the cost in new cars, where parts have to be purchased new. If you have a partial loss in that Lexus, you’ll be getting junkyard Lexus parts – much cheaper than the new parts you’ll need on that NIssan.

Answer by Creek10

Insurance companies will tell you its the “risk” factor. The risk of an 18 yr old is more a risk taker than a 30 yr old so they are more likely to have an accident. Just as having a car that gets stolen more often than another type of car.

Auto insurance is an un-regulated industry just like Oil, Gas and Drug companies so they can charge customers whatever they want.

Answer by Flower

The insurance cost is based on the risk of theft of the car as well as number of claims for that type of car, plus your personal information. The gas mileage has nothing to do with the value. Insurance is based on value as well as where you live and the crime rate there. The 2008 is obviously less risk of being stolen or in an accident than the 2011 Nissan even though the car is worth more.

Answer by Scooter Power

Those estimated quotes are not realistic. Best bet is call your insurance company and ask. Those quote estimates are sometimes based on the average age group that typically drives that model car. You of course may not be in that average group.

Answer by car253

Your quotes are wrong. Call a live insurance agent to do the quotes for you. 2 door cars always cost more than 4 door cars. But you still do not do the quotes correctly.

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Why is car insurance more expensive based on age than value?