Ultra-Safe Cars Can Cost More to Insure

You may assume the safer your car, the lower your insurance rate. That used to be true when it was just having daytime running lights. But the newest safety features don't lower your premiums. In fact, high-tech vehicles outfitted with cutting-edge safety features are often much more expensive to insure. Keep reading to learn why.

High Safety/High Cost

The latest and greatest cars often tout state-of-the-art crash-prevention systems and Advanced Driver Assistance Systems (ADAS). These high-tech offerings include everything from back-up cameras and blind spot detection sensors to autonomous braking systems and technology that warns drivers when they drift into another lane.

While this gear certainly helps prevent traffic accidents, it is also very expensive to repair. Not only are there limited replacement parts for these safety features, but these systems often require costly software recalibration and other expensive services. All told, repairing these sensitive safety features is costly. As a result, insurance charges for these cutting-edge, super-safe cars are on the rise.

Insurers claim that while these safety features could eventually lead to fewer car collisions, there are not enough advanced vehicles on the road at present to move the needle. In the meantime, when an accident occurs, insurance companies are stuck covering pricey safety feature repairs – and they’re passing along some of the expense to car buyers.

In the 2016 model year, WardsAuto.com reports that approximately 14% of cars sold included collision-mitigation technology.  Some insurance companies say 25% to 50% of all cars on the road will need to have these collision prevention systems before accidents would decrease enough to offset the exorbitant repair costs of these high-tech features.

Everyone is Paying More

Buyers of cars loaded with safety features aren’t the only ones facing higher insurance costs. Everyone is now being charged more for liability insurance. That’s because if a driver of a standard vehicle slams into a car equipped with ADAS, the standard-car drive may be liable for the pricey damages. 

As a result, insurance premiums are on the rise for all drivers. State Farm, for instance, raised Illinois insurance rates by nearly 6% in October – the biggest surge since 2003. The company blames the price hike on the exorbitant cost of safety system repairs as well as an increase in miles driven and distracted driving incidents.

In 2016, the number of miles driven by Americans increased by 2.8% to a record 3.2 trillion, according to the Federal Highway Administration. In the same time period, motor vehicle deaths skyrocketed by 6%.

Two Insurers That Do Offer Safety Discounts

There could be hope on the horizon for buyers of vehicles with safety features. Some experts predict that in coming years more and more insurance companies will offer discounts for owners of ADAS-equipped cars. However, accident rates will have to drop dramatically before these discounts become widespread. Currently, out of the 11 largest U.S. auto insurers, only two offer discounts for new safety devices.

Hartford Insurance Group and Liberty Mutual both offer reductions for automatic braking. This technology taps into cameras and radar to stop or slow vehicles when there is an object in the road and the driver doesn’t respond.

According to a 2016 study by the Insurance Institute for Highway Safety (IIHS), 40% of rear-end crashes – which translates into roughly 700,000 accidents a year – would be prevented if all cars had automatic braking. In five states, Hartford Insurance slashes up to 3% off the annual premium for cars with automatic braking and other safety devices.

The Bottom Line

While high-tech safety features can certainly protect you on the road, these systems can also put a major dent in your wallet and not just when you first buy the car. That’s because insurance companies currently charge higher rates for vehicles with these pricey safety systems. However, experts predict that there will be a shift in the not-so-distant future. As more and more of these vehicles hit the road and accidents plummet, insurance rates for ultra-safe vehicles will decline as well.

You may also be interested in Top Tips for Cheaper, Better Car Insurance and How to Find the Right Car Insurance.