Why Is Insurance for a New Car So Expensive?
2 Answers
Reasons why new car insurance is expensive: 1. High insurance value of new cars: The insurance value, also known as the insured amount, refers to the value of the subject matter insured as the basis for determining the insurance amount when the policyholder and the insurer enter into an insurance contract. Unless otherwise agreed in the contract, the insurer shall reduce the insurance premium and calculate and refund the corresponding premium on a daily basis. 2. Relatively more insurance coverage required: New cars require relatively more insurance coverage because minor collisions are inevitable for new cars, so novice drivers need to purchase vehicle damage insurance. Vehicle damage insurance is a type of commercial auto insurance where the insurance company compensates within a reasonable range. It refers to the insurance company's compensation for damage to the insured vehicle caused by an insured accident while the insured or their permitted driver is operating the insured vehicle.
The high insurance cost for a newly purchased car is mainly because the car is new and has a high value, making insurers perceive it as a higher risk. Like me, having driven for over a decade, every time I switch to a new car, I notice a spike in insurance premiums. One reason is the high repair costs for new cars, especially those with high-tech features like rearview cameras or sensors—if they break, the entire system often needs replacement, unlike older cars where repairs are cheaper. Secondly, new cars are more prone to accidents, as new drivers often lack experience. Insurance company statistics show higher claim rates, leading to increased premiums to cover potential losses. Thirdly, new cars face a higher theft risk, especially popular models, requiring additional anti-theft coverage. In short, I believe comparing multiple insurance providers or opting for a higher deductible can save some money, but safety should always come first.
