Does car color impact auto insurance rates?

Does car color impact auto insurance rates? | Insurance Business America

Does car color impact auto insurance rates?

Nearly half of all American drivers believe that red cars are more expensive to insure, separate studies by two US-based price comparison websites have found.

A survey of 1,000 adults conducted by InsuranceQuotes.com last August revealed that 44% of respondents thought driving a bright red car affected auto insurance rates, with the belief more common among motorists aged 18 to 29.

A 2020 poll of 2,000 licensed drivers by Insure.com, meanwhile, showed that 46% assumed that red cars cost more to insure because these vehicles tend to get pulled over more for speeding. Of those who did, more than half, or 52%, were women and the rest were men.

Read more: America's top car insurers in 2022 – a region-by-region breakdown

But is this widespread belief fact or just a myth? Here’s what experts say.

Are red cars more costly to insure?

The fact is, according to experts, insurers could not care less about a car’s color.

“The idea that a car’s color can affect your insurance rates isn’t always accurate,” InsuranceQuotes.com explained. “A red car will not be more expensive to insure, despite this being a common belief amongst consumers. For the most part, a red car will not be more expensive to insure than any other color you choose.”

“The color of your vehicle is not even a question on the insurance application, and it is a non-factor,” Kristofer Kirchen, president of Advanced Insurance Managers, told Insure.com.

However, there are certain hues that make a vehicle more expensive to buy, which may have an impact on car insurance rates.

“Though car color usually will not have an impact on your car insurance rates, white, black, blue, and red cars are usually more expensive to purchase across the board as they are very popular colors,” InsuranceQuotes.com added. “Popular car colors may be more expensive as the demand for them is higher.”

Read more: What motorists need to know about their auto insurance score

The only other scenario where car color can affect auto premiums, according to experts, is if a vehicle gets a custom paint job – but then again, the impact on rates is marginal.

“If you opt to modify the paint, such as through a custom paint job, you want to include this as part of your insurance coverage,” the automotive magazine Car and Drive noted. “Your insurer will consider your vehicle to be in the same condition that you purchased it, so if you make a modification through a custom paint job and want it covered in case of damage, notify your insurer.”

“Insurers might offer special coverage for these aftermarket [modifications] called custom parts and equipment coverage,” the publication added. “This extends your coverage to repair or replace your customizations, such as custom paint jobs, wheels, sound systems, or lights.”

What factors impact car insurance rates?

Each driver comes with a unique set of risks. To calculate how much a motorist should pay in car premiums, insurers look at a range of factors. These include:

1. Driving history

Auto insurers view a poor driving record as an indication that a motorist is more likely to file a claim in the future. As a result, at-fault accidents can drive up rates considerably. A recent study by financial services firm Bankrate showed that drivers in California see an average annual rate increase of $1,436 after an at-fault accident, the highest of any state. Los Angeles drivers, meanwhile, experience an average jump of $1,636 per year after causing an accident, the highest of any metro area included in the analysis.

The research also found that of all incidents, getting caught driving under the influence (DUI) pushes up premiums the most. Drivers with a DUI record pay an average of $1,650 more per year for their full-coverage insurance than the national average, according to the report.

2. Location

Bankrate added that the true cost of car insurance is reflected in the percentage of their income drivers allocate for auto coverage each year and not on how much they spend on premiums. But since average income between states varies significantly – often by up to tens of thousands of dollars, the firm used this metric to analyze 2022 auto insurance rates in all zip codes and carriers across the country’s 50 states to better demonstrate the impact of premiums on motorists’ overall budgets.

According to the study, the average cost of car insurance in the US takes up 2.57% of a driver’s annual income, which is equivalent to $1,771 annually. Motorists spend a much higher or lower percentage than average, depending on the state they live in, with the difference between the most and least expensive premiums at $2,120.

Read more: Revealed - the most and least expensive states for car insurance in 2022

3. Vehicle make and model

Among the biggest factors that impact auto insurance rates is the type of vehicle a person drives. A separate analysis by insurance comparison website The Zebra showed that vans come with the least expensive premiums among all vehicle types at $1,655 per year, followed by trucks at $1,735 and SUVs at $1,952. Cars remain the costliest vehicles to insure, with annual rates averaging $2,454.

In terms of brand, the Italian luxury car manufacturer Maserati has the highest annual premiums at $4,393. On the other end of the spectrum is compatriot brand Fiat, with yearly rates averaging $1,499.

4. Vehicle’s age

The Zebra’s research also found that new cars are more expensive to insure than older vehicles because they cost more to repair or replace, especially if they are equipped with advanced features such as blind-spot sensors and rearview cameras.

Data gathered by the firm revealed that a 5-year-old vehicle is about 27% less expensive to insure than its brand-new counterpart. Annual rates for a half-decade-old Honda Accord, for example, go for $1,443, while those for a brand-new model are pegged at $1,838.

“Insurers also account for variations from one model year to the next,” the report noted. “Certain model years may be more prone to crashes, thefts, or expensive repair costs than others, which can impact the cost to insure the vehicle.”

Read more: Revealed – the most and least expensive cars to insure in the US

5. Credit rating

Car insurance companies in most states – with the exception of California, Hawaii, Massachusetts, and Michigan – use credit-based insurance scores to help determine premiums as these providers often believe that policyholders with high ratings tend to file fewer claims than those with lower credit scores.

According to Bankate’s report, motorists with a good credit rating pay $1,146 less per year for auto insurance than those with a poor credit history. In Wisconsin, drivers experience a whopping increase of $4,128 – the highest of any state – when their scores go from good to poor. At the other end of the spectrum are North Carolina motorists who encountered just a $351 rise in premiums under similar circumstances.

Other factors that have a direct effect on car insurance premiums are a person’s age, gender, marital status, annual mileage, and coverage types and deductibles.

Where does the myth that red cars cost more to insure come from?

The common misconception that red vehicles are more expensive to insure comes down to statistics, according to Car and Driver.

“Sports cars will have higher insurance rates because drivers tend to drive faster and have a higher chance of getting into an accident,” the magazine explained. “When the average sports car driver shops for a vehicle, they tend to gravitate more toward red. The fact there are more red sports cars on the road and the odds these sports cars have higher rates leads many people to think that it's the color that causes the higher rates and not the vehicle itself.”

Read more: Ten ways motorists can save on auto insurance premiums

So, who cares about car color?

According to Insurance.com, it’s you – the driver. The rate comparison website polled 1,000 married men and women over the age of 25 about their color preferences and found that almost a fifth (19.5%) liked black vehicles, followed by silver (18.5%), white (16.2%), and blue (12.5%). Red, the color many thought pushed up premiums came in fifth, was chosen by 8.5% of respondents.

In terms of reasons for opting for a particular hue, almost a third (31.5%) said “it was pretty.” A quarter admitted they had “no other choice,” while 10.2% chose the color “because it wouldn’t show dirt.” “I look good in it” and “it blends in” rounded up the top five motives for picking a particular car color.