Why Is New Car Insurance So Expensive?
2 Answers
Because new car insurance has a high insured value. Here is a partial introduction regarding insured value: 1. Insured value refers to the value of the subject matter of insurance that 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 insurance interest that the policyholder enjoys in the subject matter of insurance. 2. In addition to the compulsory traffic insurance that must be paid, 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. 3. New cars require relatively more insurance coverage because they are more prone to bumps and scratches.
Having driven for nearly twenty years, I've realized that the high cost of insurance for new cars is not without reason. New cars themselves are expensive, so insurance companies have to price the policy based on the vehicle's value—if it gets into an accident, the payout would be substantial, which naturally drives up the premium. Moreover, most new car buyers are novice drivers with limited experience, and their accident rates are several times higher than those of experienced drivers, forcing insurers to charge more to balance the risk. Additionally, repair costs nowadays are no joke—an original headlight can easily cost thousands, and even a minor paint scratch might set you back several hundred, all of which get factored into the premium. On top of that, new cars usually come with comprehensive coverage, including theft and scratch protection, further keeping premiums high. There are also significant regional differences—for example, premiums in first-tier cities are generally about 20% higher than in third- or fourth-tier cities.
