Effect Of Car Age On Auto Insurance

So many things affect auto insurance; many drivers don't even understand all of these factors. For example, did you know that your car's age affects various aspects of your insurance? Here are some of the specific ways in which these effects occur.

Type of Coverage

The basic forms of insurance coverage include liability, collision, and comprehensive coverage. Liability coverage (which is mandatory) compensates victims of car accidents you might cause. Collision coverage compensates you for damages you might incur if your car collides with other cars or objects (such as trees). Comprehensive coverage compensates you for the loss of a car or damage that doesn't involve a collision.

If your car is relatively new, then you need collision and comprehensive coverage. You need these two forms of coverage since you stand to lose a lot if something damages the car or someone steals it. You don't need comprehensive or collision coverage if the car is decades old because such cars are inexpensive. The premiums you pay for collision or comprehensive coverage might not be worth the benefits.

Value of Coverage

A relatively new car has a high value and is expensive to replace. Such a car is also likely to attract high repair costs in case of damage. Thus, you need a high-limit for your comprehensive or collision coverage for your new car. As the car ages, however, its value also drops, which should allow you to lower your insurance limits too.

Insurance Premiums

The value of a car, in many cases, is indirectly proportional to the car's age. A car's value affects its insurance rates, at least as far as collision and comprehensive insurance are concerned. This is because your auto insurance carrier will spend more to replace a three-year-old car than a nine-year-old car even if they are of the same make. Thus, you may see your coverage rates decline as your car ages.

Insurance Riders

Lastly, the auto insurance rider you may need also depends on the age of your car. For example, you should consider a depreciation waiver if your car is relatively new because new cars depreciate faster than older cars. However, you need a roadside assistance rider if your car is aging since old cars are more likely to break down than new cars.

This is why it is never a good idea to copy a friend or relative when buying auto insurance; your circumstances are likely very different. Talk to an agent and consider your unique circumstances, including your car's age before you buy coverage. For more information, contact Bear River Insurance.