How Do I Know If I'm Getting A Good Deal on Car Insurance?

Introducing APPP: A Formula for Comparing Rates and List Prices
  • By Jeff Beckham
  • |
  • Feb. 19, 2019
  • |

How Do I Know If I'm Getting A Good Deal on Car Insurance?

Introducing APPP: A Formula for Comparing Rates and List Prices
  • By Jeff Beckham
  • |
  • Feb. 19, 2019

Buying a new car is the perfect opportunity to shop around for insurance. You're going to need to show proof of insurance before you drive your new baby off the lot, so why not try to save a few bucks at the same time?

To help you determine whether you're getting a good deal, The Zebra has created a formula called APPP: Annual Premium as Percentage of Price. Based on our 2019 State of Insurance report, we looked at prices for 252 cars, trucks, and SUVs across 28 brands. We started with the manufacturer's suggested retail price (MSRP) for 2018 models and layered in the average annual premium for each one. The lower the score the better, and if you can find an affordable car with a low APPP rating, you'll have found the sweet spot.

The APPP model lets you compare insurance prices on a more level playing field. Of course, you're doing to pay more to insure an Audi R8 than a Subaru Outback ($2,710 a year more, as it turns out), but when you look at your insurance payments as a percentage of what you paid for the car, some interesting numbers emerge.

Where We Got This Data

The Zebra's 2019 State of Insurance report analyzes more than 61 million car insurance rates to examine how risk factors affect pricing. Insurance is regulated differently in each state, so car insurance prices also vary substantially by location. And with more than 650 insurance companies using a mix of some 43,500 rating factors, any given person could conceivably choose from millions upon millions of car insurance quotes. The Zebra’s annual report explores rates across all 34,000 U.S. zip codes and over the past 8 years to identify trends and critical factors impacting rate changes, and what that means for the 250 million U.S. drivers in 2019.

Which Brands Are Cheapest to Insure?

Volvo Has the Lowest APPP; Mitsubishi the Highest

When looking at the average for brands with five or more models reviewed, Volvo emerged as the brand with the lowest annual premium as a percentage of price, at 4.07%. Most models could be insured for less than $2,000 per year, perhaps not surprising for cars that are consistently ranked among the safest in crash tests. Other high-end brands (Cadillac, Mercedes-Benz, Land Rover) came out on the low end of the APPP formula, combining reasonable premiums with high sticker prices.

On the high end was Mitsubishi, the only brand whose APPP score topped 8 percent. The Zebra reviewed six 2018 models in the Mitsubishi line, and the lowest average premium was $1,658 on the Outlander Sport, still $188 above the national average. The highest was the Mirage, one of 2018's cheapest cars with a sticker price of $14,290, but the premium costs of $1,753 per year is 12.27% of the MSRP.

The APPP Formula

The Annual Premium as a Percent of Price (APPP) formula is a simple one: the annual premium divided by the MSRP (manufacturer's suggested retail price). Here's how it works. Let's take the Dodge Charger, the model made famous years ago by both The Dukes of Hazzard and The Fast and the Furious.

The 2018 Charger had an average annual premium of $2,210, and the MSRP for that model was $29,590. Using the formula, the APPP for the 2018 Dodge Charger is:

Average annual premium ($2,210) / Base list price ($29,590) = APPP (7.47%)

Where Does Your Car Rank?

From Nissan Versa to Porsche Boxster

All 252 models we reviewed are plotted in the interactive chart above. Nearly every model came in between $1,500 and $2,500 in annual premiums, with trucks being generally the least expensive to insure, followed by vans, SUVs, and sedans.

Individual standouts included the Nissan Versa, which came in with the highest APPP at 12.51%. Part of that is a function of its rock-bottom starting price of less than $13,000, but its annual premium of $1,627 is $157 above the national average.

Meanwhile, the lowest APPP went to the Porsche Boxster, whose annual premium of $2,234 is only 2.39% of its $93,470 sticker price.

The APPP is a simple formula, but it can be an effective tool to quickly figure whether your car is getting you a good deal on insurance.

The Ford Escape has an APPP score of 5.77% ($1,438 annual premium / $24,935 MSRP).