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Red cars are often seen as flashy, sporty and attention-grabbing. Combine that with the common belief that drivers of red cars are more likely to speed, get tickets or get into accidents, and you have the basis for a reasonable question: Are red cars more expensive to insure?
Nope. The rumor that red cars are more expensive to insure is a myth. Thanks for reading.
Now, if the question is rephrased a little differently—like, "If color doesn't affect your car insurance rates, what does?"—the answer becomes clearer. Let's break down why your car's color doesn't matter and what factors actually matter when it comes to your car insurance costs.
Are Red Cars More Expensive to Insure?
No, red cars are not more expensive to insure. Color doesn't play any role in determining insurance premiums. According to the Insurance Information Institute (III), this is a myth.
As the III points out, your insurance premiums aren't based on your car's color but on other factors like its make, model, age, and more practically, the car's sales price and cost of repair. Even a bright red car doesn't cost any more to insure than a white or gray one. The idea that color influences your premium rates simply isn't true.
What Factors Affect Car Insurance Costs?
Why doesn't color affect your car insurance rates? Simply put, insurance companies rely on decades of data and statistics rather than basing rates on the color and appearance of your car. They focus on what increases the likelihood of accidents and claims. For example, insurers base premiums on a driver's record, the type of car being insured and other factors that are far more reliable at predicting risk than whether your car is red, white or blue.
Here's a breakdown of the most common factors insurers consider when calculating your car.
1. Driving History
The cleaner your driving record and claims history, the lower your premiums will typically be. Insurers look at your motor vehicle report (MVR) and Comprehensive Loss Underwriting Exchange (C.L.U.E.) record report to see if you've had tickets or filed claims. If these reports show a history of violations or accidents, your premiums will likely be higher.
2. Deductible
Your deductible is the amount you pay out of pocket before your insurance kicks in on a claim. So, if you have a $500 deductible on a $10,000 claim, you'll pay $500, and your insurance will cover the remaining $9,500.
Deductible options vary by insurer but typically range from $0 to $2,500. A higher deductible usually lowers your monthly premiums, while a lower deductible increases them.
3. Total Mileage
Insurers know that the more miles you drive, the greater your odds of getting into a car accident. Insurers typically use 12,000 miles per year as the standard benchmark for average annual mileage. Those who cover more than 12,000 miles are considered high-mileage drivers and may pay higher premiums. Low-mileage drivers who drive less than 7,500 miles a year may qualify for lower rates.
4. Car's Make and Model
The car you drive, and more specifically, how much it costs to repair or replace, directly impacts how much you pay for car insurance. More expensive cars with pricey parts and luxury features will cost more to insure than lower-priced ones. Auto insurance companies also consider the car's safety record, theft rates and engine size, among other factors. If you finance your car, your lender likely requires you to carry a full coverage policy, which can raise your costs even more.
5. ZIP Code
Where you live has a big impact on your insurance premiums, which can vary widely by state and even by ZIP code. Insurers keep tabs on local data, such as accident rates, theft statistics and repair costs, to determine the risk level associated with your area. For example, you may pay more for car insurance if you live in a big city, which typically has higher rates of accidents, theft and vandalism.
6. Age
According to National Highway Traffic Safety Administration data, younger drivers are more likely to be involved in car accidents including fatal crashes. Not surprisingly, insurers set higher rates for younger drivers to account for their increased risk. Premiums tend to drop at age 25 and decrease as you get older.
7. Gender
According to the III, women are statistically safer drivers, with lower rates of DUIs and major crashes. As a result, women drivers may pay less for car insurance than their male counterparts, although the difference may be marginal. A PolicyGenius study found that on average, women pay $16 less per month than men, which adds up to $189 in annual savings.
8. Marital Status
As with age and gender, your marital status also impacts your insurance rates. Statistics suggest that married drivers file fewer claims than single, widowed or divorced drivers and are less likely to have accidents. On average, insurance industry site The Zebra reports, single drivers pay $149 more per year than married drivers, while the cost difference is more modest for divorced and widowed policyholders.
9. Insurance Type and Coverage
Naturally, the policy you choose plays a large role in the price of your car insurance. Typically, the more coverage options and higher coverage amounts you choose, the more you'll pay in premiums.
For example, you'll pay less if your car is paid off and you opt to carry only your state's minimum liability coverage. On the other hand, if you finance your vehicle, the finance company likely requires comprehensive and collision coverage, which can significantly increase your premiums.
10. Claims History
Insurers consider your history of claims when assessing your risk as a policyholder. Premiums tend to go up if you're involved in an accident, but not always. The claim's cost and how serious the damage is are key factors carriers must look at when deciding whether to raise your insurance rates.
According to ValuePenguin, your premiums could jump an average of $87 per month for full coverage if you're at fault for an accident. Your rates typically won't increase until your policy renews, which is when you'll see the biggest jump after an accident. It can take three to five years for your premiums to go back down.
11. Credit Score
Most states allow auto insurance companies to factor in your credit score when setting your rates. Consequently, a higher credit score could result in lower premiums and vice versa. Bear in mind, insurers use a credit-based insurance score, not the score lenders commonly use, but it's based on the same information. It's a good idea to check your credit score and, if necessary, take steps to improve it to avoid a higher rate.
How to Lower Your Car Insurance Costs
Switching from a red car to another color won't save money on your car insurance since color isn't a factor insurers consider. Here are some popular ways to lower your premiums without worrying about the color of your ride.
- Raise your deductible. Higher deductibles usually mean lower rates because you agree to pay more out of pocket if you file a claim. The III reports that increasing your deductible from $200 to $500 could lower your collision and comprehensive coverage costs by 15% to 30%. Upping it to $1,000 could reduce your premium by as much as 40%. Just be sure you have enough in your emergency fund to cover a potentially larger responsibility if your car is damaged.
- Reduce your coverage. It's wise to review your policy coverages and amounts every year or whenever your policy is up for renewal. This way, you can determine if you're paying for coverage you no longer need. For example, if your car is older and paid off, you might consider dropping collision or comprehensive coverage to save money.
- Look into discounts. While you're reviewing your policy, it's a good time to contact your agent to make sure you're getting all the discounts you qualify for. For example, you may know about loyalty, multi-car discount and bundling discounts for purchasing multiple policies from your provider. But did you know you can also score discounts for anti-theft equipment or safety features on your car? If you drive a newer car, you might even save up to 15% on your premiums.
- Check out usage-based car insurance. If you drive less than 10,000 or 12,000 miles a year, you might qualify for a low mileage rate. Insurers set their own criteria for what qualifies as a low-mileage driver, so check your provider's specific requirements. Ask your provider if you have the option of switching to a pay-per-mile car insurance rate, which includes a base rate plus a per-mile rate. Usage-based car insurance may be another option; it tracks your mileage and driving behavior and allows your insurer to adjust your premium according to how safely you drive.
- Shop insurance providers. It doesn't cost you anything to see if you could save money by switching to a new provider. It's widely recommended to shop multiple providers to help make sure you're getting the best price for the coverage you need. Just be sure to compare the same policy options with each provider for an apples-to-apples comparison.
You can get quotes online from most insurance company websites or by calling insurers directly to speak with a representative. To streamline the process, consider using Experian's car insurance comparison tool to get quotes from more than 30 top insurance carriers.
The Bottom Line
Thankfully, the color of your car won't affect your insurance rates. If you're concerned about paying too much for car insurance, you can save by using the tips above, including raising your deductible, lowering your coverage and taking advantage of discounts. It's also a good idea to talk to your agent to explore ways to lower your auto insurance costs..
If you're considering switching to a new insurance company, check your Experian credit report and score first. You may discover an issue hurting your credit, which you can fix to potentially lower the cost of your next policy.