Reader question:
Do my car insurance rates change if I buy a new car?
London
Usually.
One of the main reasons that car insurance rates go up is a pretty simple one. Financiers require you to have more coverage on a car you have a loan on, in order to cover their own backs, and as such with a new car you’ll probably have more coverage than is the norm for you.
This is the case if you are buying through a car lot or through another type of dealership that requires you to make monthly payments. If you just buy a cash car, though, you probably won’t see a rise in your rates, at least not for this reason.
There are other reasons having to do with new cars that you might see your rates rise. Insurance companies consider a lot of factors when trying to figure out what to charge you, and one of those factors is the newness and the worth of your vehicle. For this reason, you’ll get charged a lot more for a 2007 BMW than for a 1982 Ford.
The best thing to do when adding a new car to your coverage is to shop around and see if other companies might offer you better prices. Your rates may go up regardless of whom you choose to insure with, but some might not go up quite as much as the provider you’re with right now.
Cheers,
Fashun Guadarrama.