Lowering Car Insurance In One Fast Move

NEW YORK (MainStreet) — Slashing your car insurance rates can be as simple as choosing a different vehicle when you are shopping for a new car.

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A new car insurance rate comparison calculator released by insuranceQuotes.com enables consumers to compare the insurance costs of different cars by year, make and model. Click here.

The tool allows consumers to find out rates by various variables such as age, gender, marital status and zip code.

Rates for different makes and models vary widely. If you're thinking of an entry-level luxury sedan over a standard mid-size sedan or SUV, prepare to pay a lot more for car insurance. A 2014 Audi A8 3.0T Quattro costs 66% more to insure than a 2014 Toyota Corolla LE Premium, and a 2014 Mercedes C250 costs 23% more to insure than a 2014 Toyota Camry XLE. The sample insurance premiums are for a 40-year-old married woman living in Chicago (ZIP code 60640).

"One of the biggest mistakes consumers make when shopping for a new car is not considering the insurance costs," said Laura Adams, insuranceQuotes.com's senior analyst. "Nearly seven in ten Americans say it is important to know insurance costs before buying a car, yet only three in ten actually get an insurance quote before car shopping."

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Purchasing an environmentally-friendly vehicle such as a hybrid or electric car will increase your insurance rates. Trading in a 2010 Hyundai Sonata GLS for a 2014 Toyota Prius V Five would lead to 17% higher car insurance costs.

The rates are determined partly by how much it would be cost to replace or repair the part or vehicle and parts in hybrids are more expensive, she said.

"If you buy a car blindly without looking at the insurance costs, you may be in for a big surprise," Adams said.

The three "invisible costs" of owning a car are maintenance, fuel and insurance. Consumers who are considering purchasing a luxury car could spend 40% to 70% more for car insurance.

Insurance rates even differ among entry-level luxury cars. A 2013 Mercedes C250 costs 7% more to insure than a 2013 BMW 328i.

Upgrading to a vehicle with a more powerful engine can also lead to higher car insurance costs. For example, a 2014 Subaru Outback with a six-cylinder engine costs 14% more to insure than a 2014 Subaru Outback with a four-cylinder engine.

For people who want a large vehicle there is good news - it costs 7% less to insure a 2013 Honda Odyssey EX (a minivan) than a 2013 Nissan Altima 2.5 (a mid-size sedan).

Car insurance providers consider factors that affect a consumer's risk level such as their credit history, marital status, education level and other information.

Since all carriers consider different factors and do not weigh all criteria equally, it is important to compare rates from several companies, she said. Each state also regulates insurance premiums differently.

"Raising the awareness level for consumers is important because they have no idea how complex it is," Adams said. "There is a lot that goes into it."

Americans need to understand that insurers use criteria that assess risk, said Loretta Worters, vice president of the Insurance Information Institute in New York.

Also See: How To Slash Your Car Insurance Bill

"Your premium is based on how likely you are to get in an accident and how much that accident will cost," she said.

The average yearly auto insurance premium is almost $800, but there is wide variation around these average, said Worters. For many insurers, "credit-based insurance scoring is one of the most important and statistically valid tools to predict the likelihood of a person filing a claim and the likely cost of that claim," she said.

"Credit-based insurance scores are based on information like payment history, bankruptcies, collections, outstanding debt and length of credit history," she said. "For example, regular on time credit card and mortgage payments affect a score positively, while late payments affect a score negatively."

--Written by Ellen Chang for MainStreet

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