Do smaller cars equal cheaper insurance?

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Joel Ohman
Founder, CFP®

UPDATED: Apr 18, 2016

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Here's what you need to know...
  • The size of your car does not impact your insurance rate
  • Many factors–such as your driving record, your age, and your credit history–make a difference when it comes to your insurance premium
  • The make and model of your car can affect your premium as well

The premise kind of makes sense: Less car should equal less money. Unfortunately, there doesn’t seem to be any evidence that having a small car saves you money on your insurance.

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Factors like your age and driving record far outweigh things such as your vehicle’s size or body color, although some actuaries may weigh them when determining rates.

Does size matter when it comes to auto insurance?

Which do you think costs more to insure: a 2012 Kia Forte Koup (with a sticker price of $17,200) or a Mercedes SL (starting at $135,400)?

It turns out that the insurance for the Mercedes SL costs $22,536, or about $5,300 more than the total cost of the Forte Koup, even though both cars are practically the same size.

The size of a car’s sticker price is more of a determining factor in insurance premiums than the size of the car itself.

There simply isn’t any evidence, from state insurance commissions or studies of the most expensive cars, to say that car size is a significant factor in car insurance rates.

What factors can lower auto insurance rates?

Exotic Silver Car

There are many factors more important than size that will determine what you pay for auto insurance:

  • Your age – Actuaries use statistics to determine your rates and drivers under the age of 30 are in more accidents; thus they pay more for auto insurance.
  • Your gender – Young women are generally safer drivers than young men and some states, such as Washington, allow insurers to charge less using this information.
  • Your car’s price – The price, not the size, of your car can increase your premiums because expensive cars are more expensive to repair.
  • Your driving and claims history – If you’re a driver with multiple accidents, then you’re going to pay more for auto insurance. Your rates will also be higher if you’ve made multiple auto insurance claims.

All of these factors weigh more in determining your auto insurance rates than the size of your vehicle.

Furthermore, there are things that you can do as a driver to lower your rates.

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You can get discounts if:

  • your car has certain safety features
  • you’re a good student
  • you insure more than one vehicle with the same company
  • you buy different kinds of insurance from the same company

Do insurance commissions show a correlation between vehicle size and the price of car insurance?

The state insurance commissions are supposed to be the watchdogs of insurance companies and they often have advice on how to save money on auto insurance fees.

None of them mention the size of the vehicle as a significant factor.

California state insurance commissioner Dave Jones gives all kind of tips on how to save money on auto insurance.

His advice ranges from getting liability-only coverage on older cars to multi-line discounts. He even recommends possibly taking on a higher deductible.

But he does not mention whether the size of your car affects your car insurance rates.

The size of your car simply has no bearing on the cost of your insurance rates. You are better off looking at the age of the driver, the individual’s driving record, and even his or her credit record and the price of the car.

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