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Do Insurance Companies Offer Cheaper Rates on Safer Cars?

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On: Mon, Aug 12, 2013 at 10:59AM | By: Elizabeth Puckett

Do Insurance Companies Offer Cheaper Rates on Safer Cars?

The safer the car, the cheaper the insurance, right? Possibly, but the car you drive is only a part of the equation when it comes to insurance premium rates.

Automotive safety ratings as a stand-alone factor will not necessarily cut your auto insurance rates, not significantly at least. The ratings given to cars based on the crash test conclusions gathered by the Insurance Institute for Highway Safety, or IIHS, are just one piece of the puzzle considered when offering a customer a rate.

What it really matters is how likely it is that you will file a claim during the duration of your policy. This factor is calculated by taking many different things into consideration. Some of these things—like gender, age, and where you live—are somewhat out of your control. Otherwise, your driving record holds the biggest weight in your likelihood of filing a claim.

Additionally, more than how safe your car is, the insurance company wants to know the bottom line: how much is your car going to cost to replace or repair if you are involved in an accident. The insurer will also take into account what kind of damage your vehicle will do to other cars and passengers. So, say you drive a nice big safe sports utility vehicle, that large SUV is going to make your personal safety better for you and your passengers, but it is more likely that your big vehicle is going to do some major damage to the cars, people, and objects you hit.

A great crash test rating on the car you drive may mean fewer medical payment claims, but insurance companies don’t rely on safer cars to make that determination. They generally use real world data based on their past claims among all insured customers.

Safety features will, however, lower your rates, and insurance companies love those safety features that mean increased safety for you and your car, or a lower risk of an accident. Features like anti-lock brakes are standard in all cars now, but cars with features like object detection will likely get a discount on that feature; that will probably be in vain since a newer car with such options will be more expensive to replace if you are in an accident.


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