<strong>Reader question:

What’s the difference between insurance for a new car and an old car?

Oliver

The difference isn’t a big one, but it can be important.

It’s like this. They’re both cars, they might even be the same kind of car, the only difference being the year, but your view of them is completely different, and so is an insurance company’s. You want to get more insurance on your new car than on your old one, because, hey, it’s new. Your insurance company wants to charge you more for insurance on your new car because it’s worth more and would cost more to replace, and at the same time people are statistically more likely to drive badly in newer vehicles.

The more you pay for your car, the more you’ll pay for your insurance. This isn’t always the case. Volvos, for example, tend to get cheaper insurance coverage because they have lower theft rates and collision rates. So, when you buy a new car, either be ready to face higher rates, or get a Volvo.

So how do you save on insurance for your new car?

• Get some safety add-ons that protect passengers, like interior padding and collapsible steering columns.
• Get some safety add-ons that keep you from crashing, like anti-lock brakes.
• Find a company that replaces total losses. Some companies now offer to replace a new car with another new car of the same make and model, without deducting for deprecation if that car is in its first year or first 15,000 miles.

Cheers,

Fashun Guadarrama.