There aren’t industry accepted standards or readily available published safety ratings specifically used by car insurers mainly because every company has their own methods when it comes to evaluating a car for insurance purposes. However, many carriers confirm that they look at the crash test results when they determine if they should charge more or less to insure an automobile.
An automobile’s make, model, age, engine size, body type, speed capabilities and safety features affect insurance rates. Also, what type of drivers have access to such automobiles is very important in determining the final premium quote. While, a company may even refuse to insure a powerful and fast car when there is a teenage driver listed, they may only charge slightly higher premium when it is a 50-year-old driver with clean driving record.
Although there are several organizations publishing safety ratings, insurance industry looks at two testing bodies
The National Highway Traffic Safety Administration (NHTSA) is a federal government organisation with a mandate to enforce vehicle performance standards in order to reduce deaths, injuries and financial losses. They carry out crash tests and rate automobiles with stars. The highest score is 5 stars, which indicates that the vehicle has the best safety ratings.
Insurance Institute for Highway Safety (IIHS), a non-profit organization supported by the insurance industry, rates vehicles from Good to Poor. As their site states, IIHS evaluates crashworthiness of a vehicle by testing how well it protects its driver and passengers and checks crash avoidance and mitigation by looking at how an automobile’s safety features can prevent a collision or reduce its impact. They also check how a car withstands a crash from rear and evaluate roof strength.
They look at how seat belts keep people in position and airbags and head restraints reduce injuries due to impact by keeping people in position and cushioning the blow. The car may be a wreck after a test but may still protect its occupants well. This point alone should encourage people shopping for a new automobile to check the safety ratings.
Of course, these tests cannot consider every possible scenario and every detail of a vehicle and give a conclusive thumbs up or down in all conditions but they are the best information we have at the moment.
Many insurance companies rely on these two vehicle safety ratings when they determine their ratings for each auto. Safer automobiles reduce accidents and injuries and that means insurance companies receive less claims and pay less for each claim. This knowledge encourages underwriters to be more competitive when they are asked to price coverage for a car with a 5-star safety rating.
Of course, damages sustained in a collision determine the cost of repairs or how likely they are to be totaled. Car insurers not only do rely on crash tests to see how they withstand and amount of damage they sustain but also they look at past claims and loss data. That is why certain cars are more expensive to insure.
Every company has their own insurance ratings applicable for each make, model, age and value car. Along with crash test results, companies look at these details. For example, an expensive automobile means they will pay more for repairs and when they total it. Also, a vehicle with widely available parts is usually cheaper to repair. Once all these factors are taken into account, they make a real difference to the amount of auto insurance premiums charged.
Insurers also assume that people who choose these vehicles are more safety conscious, careful and considerate drivers and give them extra credit for their choices.
Another reason auto insurers take safety ratings seriously is the fact that car structures, designs, road handling, considerations to prevent tipping over and engine reliability are some of the factors contributing to or preventing accidents. According to NHTSA, over 6 million auto accidents a year are caused by a fault in the car.
You may not buy a car based on safety ratings or don’t care much about the possible insurance savings but you should at least check that the vehicle you choose doesn’t have major flaws, especially when you are buying an older auto.