How to Estimate Car Insurance Before Buying a Car

Auto Insurance, Insurance
How to Estimate Car Insurance Before Buying a Car

Even the savviest car shoppers often forget to estimate car insurance costs before buying.

The type of car you drive is one of the key variables car insurance companies plug into their formulas to determine how much to charge you. Depending on the vehicle, the cost of car insurance can vary by hundreds of dollars a year for the same driver.

That’s why it pays to get some initial car insurance quotes for models you’re thinking about buying. Along with gas mileage and maintenance costs, car insurance premiums are an important consideration when calculating the long-term cost of owning a car.

For most categories, NerdWallet averaged rates from the largest insurers for 30-year-old men and women in 10 ZIP codes and with 100/300/50 liability insurance limits, 100/300 uninsured motorist bodily injury coverage limits, and collision and comprehensive coverages each with a $1,000 deductible. We included additional coverage if it was required by state law. We used a 2013 Toyota Camry in all cases.Our sample retired driver was 67 and drove 50% fewer annual miles than other groups, as did our sample low-mileage driver. Our sample young driver was 22 and carried the minimum required coverage. These are sample rates generated through Quadrant Information Services. Your own rates will be different.

Why some cars cost more (or less) to insure than others

Insurance companies charge varying premiums for different car models. Here are some of the vehicle characteristics that affect the cost of insurance:

  • Retail price — Generally, the pricier the car, the more expensive it will be to insure. Assuming you buy comprehensive and collision coverage, the insurance company will be on the hook to pay out the car’s market value if the vehicle is stolen or wrecked beyond repair.
  • Cost of parts — High-end models such as sports cars often use parts made from carbon fiber and other specialized materials that are expensive to repair, which drives up the cost of damage claims.
  • Safety — Over time, cars that do a good job of protecting drivers and their passengers bring down insurance costs. Fewer injuries means fewer claims for medical payments and personal injury protection.
  • Typical driver — Vehicles that tend to attract safe drivers — think minivans — are generally cheaper to insure. Safer driving means fewer wrecks, which translates into fewer claims for injuries and property damage.

How to get car insurance estimates

In your search for a car, follow these steps for estimating the cost of car insurance.

  • Narrow down your top choices for vehicles.
  • Decide how much coverage you need. If you’re buying a new car, include collision and comprehensive, which cover damage or loss of the vehicle. Your lender will require you to carry them if you finance the car. If you’re buying a used clunker with cash, you may not need collision and comprehensive.
  • Get quotes for the same amount of coverage for the vehicles you’re thinking about buying. NerdWallet’s car insurance comparison tool can help you get started. You don’t have to provide personal information to get initial estimates.
  • Average the three lowest quotes to estimate the cost of insurance for each vehicle.
  • Factor in the cost of car insurance to help you make a final choice. If you can afford a Porsche 911, you probably don’t have to worry about a few hundred dollars’ difference in premiums. However, it’s still a good idea to know how much car insurance will cost.

Shop around for coverage

Do some comparison shopping when you’re ready to buy insurance. Compare car insurance quotes, and look for a company with a good reputation for customer service. Here are four large companies to consider, along with some offerings that may interest car buyers. (Note: Discounts may not be eligible to be combined.)

Allstate

Allstate offers a 30% new car discount for the first two years you own a new vehicle. Other vehicle discounts include:

  • Passive restraint: Up to 30% off if the car came from the factory with airbags and motorized seatbelts
  • Anti-lock brakes: 10% off
  • Anti-theft device: Up to 10% off
  • Utility: Up to 15% off for a utility vehicle with a model year of 2002 and prior
  • Farm vehicle: Up to 10% when the vehicle is used primarily for farm or ranch work

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Geico

Geico offers four discounts for vehicle equipment. They are:

  • Air bags: Up to 25% for driver-side air bags or 40% for full-front-seat air bags. The discounts apply to the medical payments or personal injury protection portion of the insurance premium.
  • Anti-lock brakes: Up to 5% off on collision insurance.
  • Anti-theft system: Up to 25% off the comprehensive portion of the premium if the car comes with a built-in anti-theft system
  • Daytime running lights: Up to 1% off certain types of coverage.

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Progressive

Progressive offers common discounts, such as a multiple-vehicle discount and a discount for bundling car and home insurance. The company is a leader in usage-based insurance with its Snapshot program, which uses a plug-in device to track driving. Premiums are based in part on when, how well and how much you drive. Most customers earn a discount after enrolling in Snapshot, the company says.


NerdWallet is a free tool to find you the best credit cards, cd rates, savings, checking accounts, scholarships, healthcare and airlines. Start here to maximize your rewards or minimize your interest rates. Barbara Marquand

State Farm

State Farm provides many of the standard discounts that other companies offer. As you shop for a new car, check out its CarCapture app, powered by Edmunds.com. When you take a photo of the back of a car, the app’s vehicle recognition technology lets you determine the market value, locate a dealership in the area, read consumer and professional ratings and reviews, and get a State Farm auto insurance quote.


NerdWallet is a free tool to find you the best credit cards, cd rates, savings, checking accounts, scholarships, healthcare and airlines. Start here to maximize your rewards or minimize your interest rates. Barbara Marquand

When you shop for car insurance, remember to compare the bottom-line cost. A company that offers a particular discount might still be more expensive than an insurer that offers low-cost coverage overall.

While the cost of insurance may not make or break your final car decision, it’s important to know how much you’ll pay for coverage before you make an offer on a vehicle. It takes only a minute to use NerdWallet’s car insurance comparison tool.

Barbara Marquand is a staff writer at NerdWallet, a personal finance website. Email: bmarquand@nerdwallet.com. Twitter: @barbaramarquand.