Why Is Insurance for a New Car So Expensive?
3 Answers
Because the insured value of a new car is high. The insured value refers to the value of the subject matter insured, which serves as the basis for determining the insurance amount when the policyholder and the insurer enter into an insurance contract. It is the monetary estimation of the policyholder's insurable interest in the subject matter insured. Additionally, the price of a new car does not come with any discounts. Here is some additional information: Types of auto insurance: In addition to the mandatory compulsory traffic insurance, there is also commercial insurance. Commercial insurance generally includes vehicle damage insurance, third-party liability insurance, passenger seat insurance, and no-deductible insurance, among others. New cars require more coverage: New cars typically need more insurance coverage because they are more prone to minor collisions, and new drivers often opt for vehicle damage insurance. Vehicle damage insurance is a type of commercial auto insurance where the insurance company compensates within reasonable limits for damage to the insured vehicle caused by an insured accident while the vehicle is being driven by the policyholder or an authorized driver.
When it comes to why new car insurance is so expensive, I think the main reason is the high value of the new car itself. If it gets wrecked, the insurance company has to cover a huge payout. Additionally, new cars often come with a bunch of high-tech features like automatic parking or large touchscreens, which are expensive and complicated to repair when broken, and the parts are hard to find. Most new car owners are beginners who just got their driver's licenses and are prone to minor accidents, leading to more claims and higher risk, which drives up the premium. When I bought my last car, the insurance quote was a shock, but thinking about these factors, it makes sense. Also, car thieves tend to target new cars, increasing the risk of payouts. In short, buying a new car means being prepared to spend more on insurance.
I just bought a new car and the high insurance premium really puzzled me. The insurance company explained that the replacement cost for new cars is too high, and even minor damages can result in expensive repairs. As a new driver, I'm prone to scratches or minor collisions, leading to a higher claim rate, so the company charges more to cover potential losses. New car parts, like cameras, are expensive to repair due to their advanced technology and limited availability. Additionally, the risk of theft in urban areas naturally drives up premiums. In short, I recommend that new drivers compare prices and discounts from multiple insurers before buying a new car.
