Some safety features in newer cars can reduce the risk of certain types of accidents. However, repair costs can be higher when these features need repair, which can increase insurance costs.
For this guide, our team reviewed FSRA’s market and claims-cost guidance, Transport Canada’s automatic emergency braking guidance, IBC’s nonprofit CLEAR methodology, and the Financial Consumer Agency of Canada’s overview.
Some newer cars will be more expensive to insure than others depending on factors like repair technology and theft experience. Read on to learn more and compare quotes for your exact vehicle model.
Are Newer Cars More Expensive to Insure?
Newer model years are not always more expensive to insure. Costly sensors, parts and recalibration can offset the benefits of strong safety ratings and anti-theft features.
Insurance companies are very concerned with replacement value and repair costs. Repair costs can be higher on a new vehicle, as certain models may require specific parts that are more technologically advanced or use new materials. These parts may be more expensive and take longer to obtain. On the other hand, some used vehicles use common, readily available parts that are less expensive, which can result in a lower insurance payout.
Depreciation is another factor that affects a totalled vehicle’s value. For example, an insurer may pay substantially more when it declares a brand-new car a total loss because brand-new cars have a much higher market value than older models.
Read More: The Real Cost of Owning a Car in Canada
Do the Year, Make and Model Matter?
Insurers consider your car’s performance in terms of the likelihood of claims, theft and repair costs. Your car’s year, make and model matter in these calculations.
Another insurance factor to consider is safety features. Many new cars come equipped with up-to-date safety features such as lane-keeping assist or automatic braking systems that might help you receive a discount. However, keep in mind that these features can increase repair costs if you’re involved in an accident.
Always compare quotes using either the VIN of the vehicle or the same make, model, trim and model year. Other items should match across quotes as well, such as drivers, address, coverage, endorsements and deductibles. CLEAR uses claims experience to compare vehicles, including claim frequency, severity and theft-related losses.
What Can Make a Newer Car More or Less Expensive to Insure?
Each of these factors can raise or lower an insurance premium, but their combined effect depends on the vehicle.
Higher Replacement Value
Replacing a brand-new car after it’s written off usually costs more than replacing an older car. This means the insurer may have to pay out more in a total loss, so the insurance may be more expensive.
Replacement Parts Availability
Parts availability and repair procedures depend on the model. Don’t assume that insurance will be less expensive simply because a car is older. Get a quote for your specific car before deciding.
Tips to Manage Insurance Costs for New Cars
Buying a newer car? Learn how to compare and manage car insurance costs with our list of ways to reduce your car insurance premiums.
Bundle Different Insurance Policies
Some insurers offer a discount if you get your auto insurance from them along with tenant or home insurance, although discounts vary by insurance company.
Check Safety and Anti-Theft Equipment
Check what safety features your car has and ask your insurer whether you can get a discount for any of them. Safety technology can reduce accidents, but it can also affect repair and claim costs in different ways.
Keep a Clean Driving Record
Factors affecting quotes include your driving record and previous claims. Your vehicle type, location, how you use the vehicle, coverage options and deductibles can also affect your final quote.
Adjust Your Deductible
If you have enough in savings to pay the deductible, consider whether you want to have a higher deductible, which may lower your premium.
Read More: How Car Insurance Deductibles Work
How to Compare a Newer and Older Vehicle Before You Buy
Request quotes for each vehicle. Include the year, trim and VIN, as well as identical information about drivers and coverage limits. It’s important to keep everything else constant, including accident benefits, garaging address, annual usage, endorsements, deductibles, physical-damage coverages and liability limits, so you can clearly identify the effect of the car on the quotes.
A newer car makes sense if the quote and coverage suit your needs and fit your budget. Get the cost of the whole year’s premium, not just Collision or Comprehensive. Keep in mind what you’ll have to pay if you file a claim, based on deductibles. Find out if there’s an option for a depreciation-removal endorsement and how much it would cost. Some financing or leasing agreements require Collision and Comprehensive coverage.
Read More: See How the OPCF 43 Endorsement Works