Insurance costs affect sales of new vehicles
Some cheaper than others

Philip Quinn
National Post

Friday, April 23, 2004
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Consumers are paying close attention to insurance rates when vehicle shopping.

For example, one couple had narrowed down their leasing choice to either a Toyota Matrix or a Honda Element.

The husband, in his early 60s, was interested in the Element, liking the size and flexibility of its interior.

The wife, in her mid 50s, was even more pragmatic. She wanted to compare insurance rates for both vehicles. Their broker told them that it would cost an extra $1,000 to insure the Element (it's classified as a light- duty truck, a category that also includes minivans and SUVs).

That $1,000 difference tilted the decision firmly in favour of the Matrix.

Since picking up their new car two weeks ago, they are quite pleased with the vehicle's performance and handling. The only difficulty to date occurred when the husband banged and scraped his head on the rear hatchback door when loading something into the back of the Matrix.

Automobile manufacturers are aware that consumers are increasingly weighing insurance costs before selecting a vehicle.

"The auto manufacturers are talking to me about getting the insurance rates on their database and thus on their Internet sites," says Lee Romanov, Founder of the Consumer's Guide to Insurance. "It's because it seems to be more and more a factor in the buying decision."

Though the couple did a fair amount of due diligence, they did not go far enough, according to Ms. Romanov, and they accepted their broker's quote.

"The fact of the matter is that the gap between the company offering the lowest insurance rate and the company offering the highest rate is bigger than ever before," Ms. Romanov explains .

Her online service allows consumers to input the details of their existing vehicle or, perhaps, a vehicle they are considering purchasing. Up to 30 insurance companies will submit bids based on the provided information. The consumer can then deal directly with the top three companies that have provided quotes.

Ms. Romanov did an online search on behalf of the above couple and found they could have insured the Element for as low as $1,900, which was only $300 more than what the insurance cost on the Matrix.

"Brokers now have fewer insurance companies [to source]," Ms. Romanov says. "What has happened over the past couple of years is that insurance companies cancelled thousands of broker contracts, and brokers went from representing six or seven insurance companies to being the representatives of only one or two."

According to Ms. Romanov, the key is finding the insurance company that offers the best rate for your type of vehicle.