Truck Insurance 101 (cont.)
Vehicle type also impacts insurance costs, but not always as dramatically as you might expect. For example, you may think an SUV would be much more expensive to insure than a station wagon, but Progressive's rates show that with a wagon and an SUV of similar cost from the same manufacturer, the SUV is only about 10 percent more expensive. Using the Saturn LW300 station wagon and the Vue SUV as an example and assuming ownership by a thirty-something married couple, the wagon costs $235 for six months, and the SUV is $267, hardly enough difference to steer your purchase decision.
On the other hand, you'll likely find a significant insurance-cost difference between a large, full-size SUV and a midsize crossover SUV of similar price because the big, truck-based machine can inflict much more damage in the event of a collision. "On the bigger vehicles, the liability insurance is much higher than on a smaller truck that would be more compatible with a passenger vehicle," says Dan Kummer, director of auto insurance for the Property Casualty Insurers Association of America. "It seems to be a big problem with some of the much bigger vehicles, like a Cadillac Escalade or Hummer H2. If you hit someone in one of those, the people in the other vehicle are much more likely to be injured."
Generally, big vehicles do a good job of protecting their occupants, which can make the medical premiums lower, and they might not suffer as much body damage, so physical damage premiums will be lower. But the bigger trucks and SUVs also tend to be more expensive, so a Dodge Ram will cost more to insure than a Dakota, for example. Premium luxury models like the upcoming Lincoln Mark LT and the increasing availability of luxury goodies on trucks also make insurance more expensive. "If you've got a high-end vehicle, a minor fender bender is expensive," says Kummer. "Backup sensors in the rear end may make rear-end repairs cost $2,000 to $3,000. All of these things help lower liability, but they raise physical damage. We're seeing, on average, physical-damage costs going up."
On the other hand, some electronic goodies, like anti-lock brakes and airbags, earn customers a discount. "The insurance industry gives discounts for just about everything," Kummer says. "You really want to take advantage of some of the discounts that are out there. If you put on LoJack [auto security system], it will lower your comprehensive rate."
The standard rule of "higher deductibles and lower limits mean lower premiums" applies, so you'll need to decide how comfortable you are each deductible and limit. According to Kummer, "If you can handle a deductible of $500 instead of $250, that'll lower your rates on physical damage by 10 percent. The liability limit depends on what you can afford. Younger drivers don't usually have many assets to protect, so lower limits are fine for them. If you have a lot of assets to protect, we recommend $300,000 per person/$500,000 maximum."
Considering the myriad factors involved in auto-insurance costs, you should check with your insurance company before you buy a new vehicle to find out how each of your contenders might affect your rates.
