Factors That Fuel Prices Have On Car Insurance Companies
The rising price of fuel has had an effect on everything, including cheap car insurance rates. First rates dropped, then increases. You may be surprised to see the other effects which fuel prices have had on the insurance industry.
One thing to think about is that many people have traded in their large vehicles for smaller, more fuel efficient ones in an effort to save on gas. However, this can make your insurance rates go up, resulting in you actually losing money on the deal. Why is this? Smaller cares are not as safe as larger vehicles; and statistically, the drivers of smaller cars tend to get into more accidents, since they are generally younger than are the drivers of larger vehicles.
So what does this mean for drivers? Compare your savings in gas with your increase in insurance rates to decide if you are really saving any money by trading in your car for a smaller one.
As one expert has said, “People are more expensive to fix than cars”. What he means of course is that larger cars are safer – so it’s not just damage to vehicles which needs to be considered. People are also hurt in collisions and a larger vehicle means a lower risk of injury and lower premiums.
As far as the costs of fuel and insurance are concerned, this is what it all comes down to. Even if the price of furl drops, don’t expect the online car insurance industry to drop their rates as well. You should consider all of your options and decide if trading in that old gas guzzler is really worth it in terms of safety and cost. One thing you should think about is that the lower popularity of SUVs and other less fuel efficient vehicles makes them inexpensive as well.
If you decide to get a smaller vehicle, go for a mid size vehicle with a good safety rating; this will keep the increase in your cheap car insurance rates to a minimum. There are a few smaller vehicles which are well rated for safety, such as the Volkswagen Golf and Beetle, as well as the Mini Cooper. These cars are not necessarily safer, but statistically they are driven by older, more experience drivers and thus have a lower accident rate.
If you are driving a vehicle which is larger than you would like, you should do a cost/benefit analysis to determine if you’ll really be better of with that smaller car; keeping in mind that higher insurance premiums could wipe out all of your savings on fuel. Also, a smaller vehicle is not as safe as a larger one, so you might want to rethink that SUV after all. Research the issues and choose wisely.