Is Insurance Higher on Red Cars?

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Insurance Q&A: “Is insurance higher on red cars?”

I think we’ve all heard this question at some point in our lives. And you’ve probably been told that red cars are more expensive to insure.

Would it be a spoiler alert if we told you this question made our top 10 auto insurance myths list?

I guess the thinking is that all the fast or “cool” cars are red. The Ferrari poster I had on my wall when I was a kid seemed to back up the statement.

But is it actually true? Do insurance companies charge a higher insurance premium for red cars?

The answer is NO. Insurance companies do not use vehicle color as a rating factor (how are car insurance rates determined).

But there are definitely aspects of the vehicle taken into consideration.

Make, Model, and Year

Namely the make, model and year the vehicle was manufactured. These three unique identifiers make up what is referred to as a vehicle’s “symbol.”

Each insurer designates a different symbol to each vehicle in their rating structure. Let’s explore why these factors are considered.

Make and model are considered to determine the cost to repair the vehicle in the event of a physical damage claim, or worse, if the car is totaled.

For example, it is quite a bit more expensive to repair a Lexus than a Honda (parts, etc.). Therefore, you can expect to pay more to insure the Lexus. It’s simple math to the insurance company.

The year your vehicle was manufactured also comes into play when determining your rate. The older a vehicle is, the less it is worth and the less you can expect to pay to insure it for physical damage coverage.

In fact, there is a point where, if you can afford to purchase a new vehicle in the event yours is damaged in an accident, you may want to remove the physical damage coverage (which includes collision and comprehensive coverage) from your policy.

(What’s the difference between collision and comprehensive coverage?)

For example, if your car is only worth $1,500, you may not want to cover it for physical damage, as the cost to insure it may be more than the cost to replace it.

Having both liability and physical damage coverage is referred to as full coverage auto insurance.

How does this relate to liability insurance?

Well, color still has nothing to do with your final insurance premium, but the symbol, or make, model and year, are a factor here as well.

Unlike the physical damage coverage, which is based mostly on the car itself, liability insurance rating focuses on the driver of the vehicle.

The same car, a Mustang for example, driven by a 16 year old, would cost substantially more to insure for liability than if driven by a 55 year old. Much more so if we’re talking about a male teenager.

All that said, some argue that most sports cars are red, and because sports cars are the most expensive cars to insure, insurance rates on red cars (mainly sports cars) are higher.

The Driver

Oh and red sports cars are often driven by “aggressive drivers,” so that makes them all the more expensive to insure, on average.

Who is driving the car can have a big effect on the premium.

First, an individual’s credit history, known as an insurance score in the industry, can swing a premium by as much as 35%…or make the person ineligible for coverage all together with certain companies.

Next, your motor vehicle record (MVR) and your insurance claims history (derived from a C.L.U.E. report) are factored into your final premium. Of course, more activity on either report will result in a higher premium or refusal of coverage, depending on which insurance company you’re dealing with.

Final Word

If you drive a red car and need car insurance, don’t fret.

Each state has a Department of Insurance that verifies all car insurance companies are charging a reasonable amount, so you can be sure you’re not paying an inflated or discriminatory price.

It is recommend that you compare insurance quotes online or speak to a local independent insurance agent to ensure you’re getting the best insurance coverage at the lowest available rate.

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