In the market for a brand new luxury car? Lucky you. But be careful your luck doesn’t run out before your wheels hit the pavement. A high insurance premium on top of the cost of rolling a pristine vehicle off the showroom floor can make you feel like you’ve been taken to the cleaners. In fact, a choice automobile may cost so much to insure that its appeal will take a dive after you see the quote—nevermind how sweet the ride first looked when it zipped by you in the fast lane on I-95.
Before you become dismayed that your dream car may set you back more than expected, let’s take a look at what drives insurance costs according to those in the know: auto insurance providers. You may find that the high premium for your automobile of choice is, all things considered, not that unreasonable.
Before we delve in, keep in mind that the average yearly auto insurance premium is around $800. Variations to this average are based on many factors, such as:
- your driving record
- how often you drive your car
- where your vehicle will be parked and where you live
- whether your car is painted red (Not! Just making sure you’re paying attention)
- your age
- your gender (You thought I was kidding again. No.)
- your credit
- the car you drive
- the type and amount of coverage
You can only truly control the last item. While every state in the nation requires that you buy a minimum amount of liability insurance, you have options regarding how much additional protection to purchase. Most people do opt to add comprehensive and collision coverage, which is subject to a deductible, to cover vehicle damage or theft. You can adjust the cost of your premiums up or down by similarly adjusting the deductible you pay up or down.
Which of the other factors is most responsible for driving up the cost of auto insurance? You guessed it: It’s that second to last one: the car you drive. This is of vast relevance to the insurer because the money it is obligated to dole out to replace the damaged or missing vehicle must come from its own coffers.
Without any further ado, here are the five cars—all noted for luxury, style and horsepower—for which insurance providers are charging top dollar in 2016, according to Insure.com’s annual ranking:
- Dodge Viper: Although it’s the least expensive car on this top-five list, with an MSRP of $97,995, the Viper suffers the highest relative average annual premium compared to the other four vehicles listed, at 4.1 percent of the purchase price, or $4,048.
- Mercedes SL65 AMG: This luxury automobile is the most expensive of the top five, at an MSRP of $217,550. The average annual premium, however, represents just 1.7 percent of the purchase price, or $3,797.
- Mercedes S600 BI-T. The average annual premium is $3,539.
- Mercedes S63 AMG 4Matic. The average annual premium is $3,513.
- Porsche Panamera Executive. The average annual premium is $3,484.
Why does the Dodge Viper cost more to insure than the Mercedes SL65 AMG with an MSRP more than double the Viper’s? Insurers look at not only the vehicle’s market value but its intended usage. The typical Viper buyer loves to drive fast, whereas a Mercedes buyer is most likely looking for luxury, not speed.
In other words, car buyers should not assume that a car’s insurance costs are directly proportional to its purchase price. Price, as you can see above, is not a primary factor in determining insurance rates. Instead, “the car you drive” encompasses characteristics such as safety ratings and the likelihood the vehicle will cause damage to other vehicles in a collision. While you may be fairly safe in your sturdy SUV, for example, the occupants of the vehicle you bump up against may not be so fortunate.
Before leaving you with final thoughts on how car color and driver gender affect insurance costs, rest assured that your car premiums may be going down in the future no matter how or what you drive as cars evolve into safer modes of transportation. Even today, cars are much safer than they were 10 years ago, significantly reducing the number of fatalities associated with accidents and effectively working to reduce auto insurance costs across the board.
Credit can be given here to car manufacturers that have taken advantage of advances in steel to design cars that can better dissipate and redirect crash forces. Just as noteworthy are advances in active accident avoidance systems, such as auto braking, steering and driving.
Now, gentlemen, put your egos in low gear for a minute while we challenge the myth of the superior male driver. As a group, women have fewer accidents overall compared to men, as well as fewer DUI-related incidents and fewer serious accidents. So they pay less for auto insurance. Yet, an individual’s driving history will have a greater impact on insurance costs over time than will his or her gender.
Last, let’s put another myth to rest. While the color red is associated with many over-the-top sexy or violent images (consider the red matador’s cape that lures the horned bull), red cars are not more of a safety concern than cars of any other color. The truth is that no conclusive study has been conducted in the U.S. that validates any suppositions about car color and its effect on safety. Conjecture all you want, but a red car poses no more risk than a white, black or blue one.
So, consider auto insurance costs before you make a car buying decision or the premiums could cause sticker shock down the road. The good news is that a jazzy red ride won’t cost you an extra cent.
Edited by Maurice Nagle