Small Cars: Fuel Savings vs. Premium Increases

Thursday July 17, 2008

Price and fuel economy aren’t the only factors to consider when purchasing your next used car. A call to your insurance company is order, too.

Factor this in if you are thinking about trading in your big gas guzzler for a smaller, more fuel efficient vehicle: insurance prices. According to a news release from Insure.Com, smaller vehicles are most expensive to insure.

According to Insurance.Com, based on annual premiums for a male driver age 40 who drives 12 miles to work with policy limits of $100,000 for injury liability for one person in an accident, $300,000 for all injuries in an accident, and $50,000 for property damage in an accident (or 100/300/50 in insurance shorthand), the annual average insurance premium for a 2009 Honda Civic would be $1,670.22. An F-150 (two-wheel drive) would have a premium of $1,194.26, for a savings of $475.96.

Of course, the same article points out the average fuel difference is $1950 in favor of the Civic. So, you still come out $1475 ahead on an annual basis. Of course, you might want to invest some of that money in a good short-term disability insurance policy if you drive a small car. As Insure.Com points out, "No matter how many air bags you stuff into a smaller car, it's not going to be as safe as a larger, heavier vehicle."