If you've ever looked at your annual insurance rate and thought, “Why is car insurance so expensive?” you're not alone. Many factors contribute to the cost, especially for newer vehicles.

Drivers often ask, "is insurance more expensive for new cars?" or "why is insurance higher for new cars?" The truth is, new car insurance typically costs more due to higher value and repair expenses. (Learn More: How Much Will It Cost to Repair My Car?)

If you're not satisfied with your current rate, shop around for insurance on new cars using online tools and find potential savings quickly. Ready to find cheaper car insurance coverage? Enter your ZIP code above to begin.

What You Should Know

• New cars often have high insurance costs due to their added value and repair expenses
• Factors like age, gender, location, and driving record impact car insurance rates
• Comparing quotes from multiple insurers can lead to substantial savings on car insurance

Causes of Auto Insurance Rate Increases

Insurance is built on accurately assessing risk, and insurance actuaries are professionals who spend a lot of time analyzing a wide variety of risk factors and how each risk factor contributes to expenses incurred in the event of a claim.

This is one type of data that actuaries use to determine insurance prices. Some information is specific to the individual driver, such as your driving record and credit score. (Learn More: What Is a Driving Record and What Does It Track?)

Other information used to determine rates applies to the broader population, such as data collected on car theft rates by state.

Less experienced drivers are more prone to accidents than seasoned ones, as they may not know how to handle certain situations.

As a new teen driver, your car insurance will likely be high, even with a clean record, because insurers have limited data to assess your risk. Other less obvious factors also influence car insurance rates. Here are some examples:

Your age. As mentioned, young drivers typically face higher auto insurance rates. However, as you gain experience and age, your rates usually decrease for a time.

Yet, older drivers tend to have more accidents, so premiums may rise again after a certain age. Read our article titled "Risky Driving Behaviors & the Car Insurance Age Tax" for more information.

While premiums aren't based on mandatory vision tests, these factors can still impact your license. Without a license, you can't drive or obtain traditional insurance.

Your gender. The Insurance Institute for Highway Safety’s website has a report on fatality statistics by gender, and the numbers are sobering. While the gap is beginning to narrow, many more men than women die in vehicle crashes.

The report indicates that “for nearly every year from 1975 to 2017, male crash deaths exceeded female crash deaths by more than twice.”

While this gap narrows with age, men typically drive more miles and engage in riskier behaviors (e.g., not wearing seatbelts, speeding), leading to higher premiums where gender can be considered a risk factor.

Some states, including California, Hawaii, Massachusetts, Montana, North Carolina, and Pennsylvania, prohibit insurers from using gender in premium calculations, which generally raises rates for everyone.

How many miles you drive. If your daily commute is long and you put a lot of miles on your vehicle, your car insurance will be more expensive. You may not have a bad driving record, but the more time you spend on the road, the more chances you have to get in an accident.

Read More: Best Low-Mileage Car Insurance Companies

Tip: If your employer starts letting you work from home a few days a week or you get a new job closer to home, let your insurer know your annual miles have gone down. It could reduce your car insurance rates.

Where you live. If you live in or near an area that has a lot of vehicle theft, it will be reflected in your rates. Additionally, areas prone to strong storms can increase rates, due to claims resulting from hail damage or other disasters.

Drivers in urban areas also often pay higher rates because where there are more cars, there are usually more accidents.

The type of car you drive. The type of car you drive significantly affects your insurance premium. Luxury vehicles are more expensive to repair and replace, leading to higher insurance costs.

Newer cars, while pricier to replace, often include advanced safety features that can lower premiums by reducing accident severity. Additionally, more electronic parts in newer cars can also raise replacement costs, impacting overall premiums.

The amount you select for your deductible. This might seem like a strange risk factor.

After all, how does the amount you select to pay as a deductible become a risk? It makes sense when you view it as a risk from the insurer's perspective that is, the risk that they will have to pay on a claim.

For example, if you pick a low deductible, such as $250, even a minor accident in a grocery store parking lot that knocks out a taillight could exceed that amount to repair and replace. (Learn More: What is an insurance deductible? )

That means the insurer will be required to pay on that claim. The higher you set your deductible, the less likely the insurance company will be asked to pay on a claim. So, higher deductibles on your part mean lower insurance premiums.

Your driving record. No surprise here — if you’re a safe driver with a clean driving record, your rates will be lower than someone with a stack of driving violations or claims.

These are just a handful of the factors that insurance companies use to determine annual premiums. Other factors that can be used include marital status, coverage limits, how long you've continuously carried auto insurance, and more.

A lot goes into determining car insurance rates, and the impact of some of these factors is likely why your car insurance is so expensive.

What To Do if Your Auto Insurance Policy Is Too Expensive

If after reading this list you’re left thinking, “why is my insurance so high?” you might want to take a look at the list of car insurance companies that customers recommend. Find a company that other consumers rate highly and see if you can beat your rate.

Another option if you think your auto insurance is too expensive is to try using our car insurance calculator. By entering a few data points, you can see the top three customer-recommended companies and average rates for the most popular companies in your state.

Lastly, you can try an online marketplace to get multiple quotes from different companies. Use our free tool below to get quotes and see for yourself, do newer cars cost more to insure compared to older models.

Bundle is life! Can’t argue with that logic. 🏠 + 🚗https://t.co/uNYjYTKwoU pic.twitter.com/RRoMMaYbbc

— State Farm (@StateFarm) August 28, 2024

It may be tempting to stop your collision coverage and switch to the state minimums. This could leave you vulnerable to thousands in losses. Auto insurance costs can come in the form of unpaid claims for auto damage and medical bills.

Read More: What is liability car insurance

If you're leasing or if you have a loan on your car, this is also a breach of contract on your auto insurance coverage. You might be surprised at how much you can save by comparing and adjusting expensive car insurance online.

Comparing Insurance Quotes

If you put your information in an online calculator, you can get multiple quotes at once. You can target the best car insurance companies and determine average car insurance rates.

Ideally, you should get at least three quotes. Then look into telematics programs that track driving habits, bundling policies, and other discounts an insurance company may offer. You could get coverage well below the national average.

Our free online comparison tool below allows you to compare cheap car insurance quotes instantly — just enter your ZIP code to get started.

The content on this site is offered only as a public service to the web community and does not constitute solicitation or provision of legal advice. This site should not be used as a substitute for obtaining legal advice from an insurance company or an attorney licensed or authorized to practice in your jurisdiction. You should always consult a suitably qualified attorney regarding any specific legal problem or matter. The comments and opinions expressed on this site are of the individual author and may not reflect the opinions of the insurance company or any individual attorney.

Frequently Asked Questions

Is insurance higher for new cars?

Generally, insurance for new cars tends to be higher due to their greater value and replacement cost. However, newer vehicles often come with advanced safety features that may help offset some of the cost.

How much is insurance for a new car?

The cost of insurance for new car varies widely what kind of car insurance you really need and factors such as the make and model, your driving history, and location. It's best to get quotes from multiple insurers to compare rates.

Does a new car cost more to insure?

In many cases, yes. The higher value of a new car and potentially more expensive repair costs often result in higher premiums. However, this can be balanced by better safety features and anti-theft systems.

Find cheap car insurance quotes by entering your ZIP code below.

Is car insurance cheaper for new cars?

While new car insurance rates are often higher, some newer models may be cheaper to insure due to enhanced safety features and lower theft rates. It's important to compare specific models and insurers.

Does buying a new car increase insurance?

Typically, yes. Insurance on a new car is usually why car insurance is so expensive than on an older model of similar type, primarily due to the higher replacement cost of a new vehicle.

If you're a new driver, read our article titled "Car Insurance for New Drivers" for more information.

Is it more expensive to insure a new car?

Generally, it is more expensive to insure a new car. However, the exact increase depends on various factors, including the specific model and your personal driving history.

Does car insurance go up with a new car?

In most cases, yes. The increased value and potential repair costs of a new car often lead to higher insurance premiums. However, the increase can vary significantly between different models and insurers.

How does new vs used car insurance compare?

New vs used car insurance costs can differ substantially. While new cars often have higher premiums due to their greater value, they may also qualify for discounts due to enhanced safety features that older models lack.

Does a newer car cost more to insure?

Yes, newer vehicles usually have higher replacement and repair costs, which result in increased premiums. However, newer models may offer advanced safety features, which can help reduce rates.

Read More: Top Ways Customers Save Money on Their Car Insurance

Are brand new cars more expensive to insure than older cars?

Due to their higher value and costlier repairs, brand new cars often come with higher insurance premiums. However, they also tend to have advanced safety features that can help lower costs.

Is insurance more expensive for newer cars?

Generally, yes, but comparing quotes for your specific model can save you money. See how much you’ll pay for car insurance by entering your ZIP code below into our free comparison tool.

Are brand new cars cheaper to insure?

New car and insurance costs are often higher due to increased vehicle value and repair expenses. However, advanced safety features can help reduce premiums.

Read More: 14 Ways To Get Cheap Car Insurance

How much does insurance go up with a new car?

Car insurance on a new car can increase 10-50% compared to older models. The exact amount varies based on the make, model, and your personal factors.

Is a new car more expensive to insure?

Newer car higher insurance premiums are common due to greater vehicle value and potentially costlier repairs or replacements.

Is insurance more expensive for a financed car?

Yes, as lenders require comprehensive and collision coverage on top of liability insurance, increasing overall costs.

Read More: Collision vs. Comprehensive Coverage

Does insurance go up with a new car?

New car and insurance rates typically rise together. The vehicle's higher value and repair costs drive up premiums, though safety features can help mitigate the increas.