Higher Miles Per Gallon (MPG) May Equal Higher Car Insurance RatesJanuary 23, 2020
We’ve all felt the pinch at the gas pumps in the last couple of years. Although down in the past couple of months, the rise in fuel prices here in America and abroad have been staggering. So staggering that the American people are starting to trade in those gas guzzling SUV’s and minivans for a more fuel-efficient sedan. They are willing to sacrifice a little comfort to save some bucks at the gas station. But according to a recent article in the Wall Street Journal, that fuel-efficient sedan could end up costing you, not at the pump, but at the insurance company.
Take the Mini Cooper for example. The Mini Copper gets an astounding 37 miles per gallon on the highway. Then consider a much more roomy, Toyota Sienna (minivan) that only gets 23 miles per gallon on the highway. According to insure.com, an average male driver who is 40 years old would pay $1,704 per year for the Mini Cooper and only $1,266 to insure the Sienna. That equates to a $438 difference. The same comparison is true with a Honda compact car that gets 36 miles per gallon on the highway as apposed to a Honda CR-V (smaller SUV) that get only 27 miles per gallon on the highway. The CR-V is $412 less per year to insure (source: wsj.com). How can this be? Since prestige cars are highly desirable, there are a lot of factors that contribute to the high value of this vehicle.
The reason Americans are paying more to insurance companies for smaller more fuel-efficient cars is safety. The insurance companies will make you pay more money for smaller cars that are less likely to protect you and your occupants in a collision. While every vehicle is crash tested and given a rating, there is no arguing the fact that a big heavy-duty truck is going to hold up better in a collision than a tiny sedan. Some smaller fuel savers are also popular among criminals and are more likely to be involved in a theft. This adds to the premium as well (source: wsj.com).
The best thing to do if you are looking at a swap of your gas wasting SUV is to do some comparisons. You need to take into account how many miles you drive approximately per month, how much your payments will be and finally how much the insurance will be. This can easily be accomplished by calling your insurance agent and asking them to give you a quote. If your payments stay the same and you find that your insurance will rise, figure out how much you will save on gasoline. If you will save more, then a switch may be what you want to do. But don’t forget to factor in your family’s comfort. Yes you can take five people on a cross-country trip in your sedan, but you’d be a lot more comfortable in a big cushy SUV or minivan. If you find that the savings aren’t that significant, you may not want to go through with the swap. Seems no matter what you do you’re going to pay. As they say, they get you coming and going. It all just boils down to what is right for you.