Do you know what your car is worth? If not, one of the best places to start is by checking the Kelley Blue Book. Your vehicle’s value is an important factor that can help you make multiple decisions about owning, maintaining and repairing the car. It can even influence your decision about how much car insurance you should buy.
Your car’s value is an insurable risk that many insurers will want to gauge when developing a quote for your plan. In the end, it can affect how much you pay for plan. That’s why the Blue Book can be a helpful resource to you during your search for the right coverage.
What is the Blue Book?
The Kelley Blue Book is a consumer research guide that collects, analyzes and reports on data and financial statistics related to the automotive industry. Manufacturers, dealerships and the government rely on it as a source of important information.
However, it is also a great benefit to individual vehicle owners, too. The Blue book is one of the best places to look to determine the current market value of your car. This is not the same as the amount you paid for your vehicle, but it is still important to know.
Over time, vehicles lose value with use. For example, a car that you bought for $35,000 might be worth only $3,000 after a decade of ownership. Most cars start to depreciate from the moment you drive them off the lot. Over the years, factors like mileage, wear & tear, aging systems and technology, and the addition of new vehicle models to the market might affect your car’s depreciation. The Blue Book will help you better determine where your car’s value currently stands.
Auto Insurance and the Blue Book
Your car’s value is something that will often impact your auto insurance rates. After all, if you wreck a $35,000 car as opposed to a $3,000 car, then your insurer is likely to have to pay more money to you in recovery costs. As a result, they might have to charge you more to cover the cost risk of insuring you.
Plus, to insure a more valuable car, you will likely have to buy more coverage in the first place. It is understandable why you will pay more for buying more coverage. In fact, if you have a loan on your car, you might have to carry certain coverage anyway.
Nonetheless, the Blue Book value alone may not be the final determinant in what you pay for coverage.
How Insurers Determine Rates
Besides the Blue Book value of your car, your insurer will likely account for many other risk factors when setting your premiums. These might include:
- Location: Different communities (even different neighborhoods) are riskier for drivers. Some places have higher accident or theft risks, which might trigger higher premiums.
- Driving Record: Dangerous drivers are more likely to make auto insurance claims. They will likely have to pay more for their coverage as a result. Most insurers will review your driving history when quoting your policy.
- Usage: Drivers who drive a lot are more likely to have accidents. Therefore, your usage of your car is likely to influence whether you pay a higher price for your vehicle.
- Vehicle History: If your vehicle has defects or recalls on it, then it might cost more to insure.
- Vehicle Safety Features: The protective devices in the car can also influence your premiums, often in beneficial ways. Vehicles with strong safety risks are likely to cost less to insure.
What’s important to remember is that no two insurance companies are alike. Each will weigh risk factors differently when determining your policy rates. This can be to your benefit as you might find some insurers cheaper than others even when comparing similar policies.
Using the Blue Book to Your Advantage
One of the best ways to use the Blue Book to your advantage is to let it advise you when choosing your policy’s coverage limits. After all, you need to carry the appropriate amount of insurance coverage, neither too much nor too little. You will want your insurer to pay as much as possible for the value of your car following a loss. There are ways you can use the Blue Book to make informed decisions about how much coverage you need.
Two types of coverage—comprehensive and collision insurance—pay for instances of vehicle damage. However, they cost money to buy. Eventually, the value of your car might depreciate to the point where the premium will cost more than the car’s value itself. Plus, if you have a deductible on your policy, then you might receive no settlement at all if your insurer totals a car that is worth less than the deductible.
Therefore, you might be able to substantially reduce your auto coverage on a car with a low value. The Kelley Blue Book recommends that you only carry comprehensive and collision coverage if their premiums are worth 10% or less than the current value of your car. However, always talk to your agent before making a final decision on how to update your plan.
Also Read: Everything You Need To Know About Tire Safety
Get A Quote