With the cost of new automobiles in the U.S. hovering at $47,433, according to data from Cox Automotive, many Americans who would ordinarily purchase a new vehicle are taking more time to evaluate their choices. In 2024, the average used car listing price is $25,571, so many buyers are choosing to keep their monthly payments down by purchasing a used vehicle. Before you make your choices, however, it’s important to evaluate insurance costs to be certain you are indeed saving money.
Are New Cars More Expensive to Insure?
While many people believe that they receive a break on insurance premiums with a new vehicle since they are less likely to experience mechanical issues or wear and tear for the first few years, many other factors drive up insurance costs on a new vehicle.
They are more expensive to replace. Since new cars have higher values than used vehicles, that will be reflected in the yearly insurance premium.
They have faster depreciation. Most vehicle owners understand that new cars depreciate in value quickly: in fact, about 20 percent of the value of a new car disappears the moment you drive it off the lot, according to economic data. This is an important consideration because most car insurance policies pay for only the actual cash value of the car, not the sticker price. This essentially creates a gap between what you paid for the car and what it is worth. You’ll be paying insurance on that sticker price, not what the car is valued at. If you need to replace the car using insurance, you will get only the value of the vehicle…but you’ll still owe the lender for the original price paid.
New cars are more expensive to fix. Each year seems to bring new technology to the vehicle marketplace. As that new technology becomes more complex, it becomes more expensive to fix and replace. Entertainment systems, advanced driver assistance and safety features, security technology, and other newer systems make it a pricier affair when you take your vehicle in for repair due to an insurance-covered event like an accident.
New cars are more likely to attract thieves. The newer the vehicle, the more attractive it will be for car thieves and vandals, which contributes to higher insurance policy rates. If you do spring for a new vehicle, be sure it’s fully equipped with location technologies such as GPS and anti-theft devices, particularly if you live in an area where car theft is common.
If you choose a new vehicle, there are ways to keep a handle on insurance premiums. As mentioned before, anti-theft technologies are a good idea, as are safety features and insurance company programs in which safe driving earns discounts on policies.
Consult With a Knowledgeable Insurance Agent in ConnecticutIt’s important for vehicle owners in Connecticut to have a reliable insurance agent on their side. If you’re unsure of your options when it comes to vehicle insurance, check with a professional insurance agent. In Connecticut, Petruzelo Insurance offers business, personal, and auto policies that fit your needs and protect you in the event of a vehicle accident or theft. Call us at 866-479-3327 or visit our website for more information.