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Nov

2022

What Does Preapproved Mean for a Credit Card?

By Jackie Lam | Credit, credit card, Family Finances | Comments Off

When you get preapproved for a credit card, this means you’ve met initial criteria to receive an offer to get a credit card. In other words, you’ve popped up on a list of consumers that fit the bill for a credit card company’s requirements and are being invited to sign up for a card.

In this piece, we’ll discuss exactly how preapproved credit card offers work, the difference between what preapproved for a credit card means vs. prequalifed, and the pros and cons of preapproved offers.

What Is a Preapproved Credit Card Offer?

As mentioned, a preapproved credit card offer is when a credit card company officially invites you to apply for a specific credit card. Credit card issuers usually use criteria pulled from credit reporting agencies to extend these offers. If you fall within the parameters of the credit card requirements set by the card issuer, then you may receive an offer — either via email, snail mail, or over the phone — to formally apply for approval for the card.

How Do Preapproved Credit Card Offers Work?

While it sounds promising, getting a preapproved credit card offer doesn’t necessarily mean you’re guaranteed to get approved for a credit card. Even if you’re preapproved, you’ll need to properly apply.

When you do, the credit card issuer will look over your application and usually request additional financial and personal information. The credit card company will also check your updated credit report to figure out if your credit still meets the criteria it referred to when it sent you the preapproved offer.

Preapproved vs Prequalified Credit Card Offers

The terms “preapproved” and “prequalified” often are used interchangeably when it comes to prescreened credit card offers. And within the realm of credit cards, they often are one and the same. But in other types of lending, they mean different things.

Prequalified offers are usually requested by you, the consumer. To get prequalified, you typically need to provide basic personal and financial information. During the screening process, the credit card issuer will check your credit. However, it will only conduct a soft pull, which won’t impact your credit score. After reviewing the info you submitted, the credit card company will let you know if you’re likely to get approved.

Preapproval, on the other hand, is when you’re prescreened for offers by the credit card company. These credit companies work with the three major credit reporting agencies — Equifax, Experian, and TransUnion — to come up with a list of consumers that meet their lending criteria.

With both preapproval and prequalification, you’ll still have to submit to a hard credit inquiry and potentially provide additional financial information to actually get approved for the loan product. Keep in mind that unlike a soft inquiry, a hard credit inquiry will temporarily affect your score.

Benefits of a Preapproved Credit Card

Now that you know what preapproved means for a credit card, you may be wondering what the benefits are. In general, these are the upsides of preapproval, whether for a valuable rewards card or a virtual credit card.

Indicates Your Odds of Approval

Perhaps the most obvious benefit of getting preapproved for a credit card is that you’ll have a better sense of how likely you are to ultimately get approved for the card. Although preapproval is not a guarantee of eventual approval, if a credit card issuer has already selected you to apply and your financial situation hasn’t drastically changed, you’re likely within the required parameters to get the card.

Won’t Impact Your Credit Score

One of the major benefits of getting preapproved for a credit card is that it won’t impact your credit score. To get preapproved, the card issuer does a soft pull of your credit. Only if you decide to formally apply for the card will the credit card company do a hard pull of your credit.

Could Allow You To Secure More Competitive Terms

Getting preapproved for a credit card may allow you to secure a lower interest rate than you’d otherwise be able to get. This is because the lender is effectively advertising the card to you in order to get you to apply. Keep in mind, however, that your rates aren’t set until after you formally apply.

Recommended: How to Avoid Interest On a Credit Card

May Provide Access to Better Intro Offers

Another advantage of a preapproved credit card is that it might come with more lucrative perks than what’s more widely advertised to the public. You might be privy to cards with more attractive sign-up bonuses or introductory earnings opportunities. For instance, a cash-back credit card might offer a higher initial earnings rate through preapproval offers.

Could Get a Longer Intro APR for Balance Transfers Cards

For balance transfer credit cards that allow you to transfer your existing debt over to the new card, you might be able to get a lower introductory annual percentage rate (APR) for longer through preapproved offers. This longer introductory period could make it easier to pay off your balance in full before the regular interest rate kicks in.

Easier for You

Because credit card companies have vetted you and know that you’ve passed its criteria, you don’t have to spend time researching cards. Instead, these offers are coming to you. Still, when choosing a credit card, it doesn’t hurt to take a look around to make sure this is truly the right fit for you.

Drawbacks of a Preapproved Credit Card

While there are benefits of preapproved credit card offers, there are drawbacks to them as well.

Might Not Be the Best Card for You

While you don’t have to jump through the same hoops as you would looking for a credit card on your own, the credit card you’re preapproved may not be the right one for you. It might be a good idea to spend some time doing your own research and understanding differences in how credit cards work even if you do get preapproved.

Could Get Flooded With Unwanted Offers

Preapproval offers may lead to getting a lot of unsolicited emails, mail, or phone calls. Especially if you’re not in the market for a new credit card, you could feel inundated with offers you don’t necessarily want or need.

Potential for Theft of Personal Information

There’s a chance that a would-be identity thief can intercept your prescreened offer and get ahold of your name and mailing address. The good news is that prescreened offers are one of the least likely forms of identity theft. Plus, an identity thief would likely need information beyond what’s included in a preapproval offer.

Data Privacy Issues

This is not very common, but there’s a chance that your name, address, and other personal information are stored in databases for consumers that qualify for prescreened offers. This means that in the instance of a data breach, your information could be accessed.

Temptation to Open More Cards

Receiving preapproved offers for credit cards may tempt you to open a new credit card you don’t necessarily need, especially if the preapproval offer includes a lucrative sign-up bonus or an extended introductory APR offer. Especially if you’re already set with your lineup of credit cards, this might entice you to take on more cards than you can comfortably manage.

When You May Need Credit Card Preapproval

You might want to receive a preapproved credit card offer if you’re in the market for a new credit card and would rather not go through the full process of researching credit cards. As you know you already meet certain lending criteria, the odds of getting approved for a card are improved.

Keep in mind, however, that you don’t need to get credit card preapproval in order to apply for a credit card. If you’re getting a credit card for the first time and have a limited credit history, for instance, you’re likely not going to get so many preapproval offers — but that doesn’t mean you can’t still try applying.

Recommended: What is the Average Credit Card Limit?

Tips for Getting a Preapproved Credit Card Offer

If you’d like to get preapproved offers, you’ll want to opt in by visiting OptOutPrescreen.com . From there, you can choose to get these offers through the mail, email, or via phone.

Instead of waiting for offers to come to you, you can also get preapproved by visiting a credit card issuer’s website and applying for prequalification. This typically requires providing basic personal and financial information.

Recommended: How Long It Takes to Get a Credit Card

Tips for Improving Your Chances of Preapproval

While you can still get preapproved for offers with not-so-great credit, you’ll get offers with the most favorable terms and rates with a strong credit score. To keep your credit score game strong and thus improve your chances of improval, make sure to do the following:

• Avoid late payments

• Keep your credit utilization rate low

• Aim to keep cards open

• Don’t apply for too many new accounts

• Maintain a diverse mix of different forms of credit

Recommended: When Are Credit Card Payments Due?

How Does a Preapproved Credit Card Impact Your Credit Score?

A preapproved offer for a credit card doesn’t impact your credit score. As we talked about, lenders will do a soft pull of your score, which doesn’t affect your score.

But if you decide to apply for a card, the credit card issuer will do a hard pull of your credit. This will most likely ding your score, though generally only temporarily.

Recommended: When Are Credit Card Payments Due?

Opting Out of Preapproved Credit Cards

If you don’t want to get flooded by preapproval offers, you can decide to opt out. Visit the website OptOutPrescreen.com and follow the simple steps outlined on the website to do so. You then won’t be included on lists to get considered for preapproval for five years.

The Takeaway

A preapproved offer for a credit card means you’ve met certain lending criteria to most likely get approved for a specific card. You’ll still need to officially apply to secure approval though. But if your credit score and financial history are the same as when you initially received the offer, there’s a high likelihood you’ll get approved.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How long does it take to get a credit card if you are preapproved?

It depends on the credit card and credit card company. If you’re preapproved for a card, you’ll still need to officially apply. If you do get approved for a card, it could take anywhere from five business days to two weeks for your card to arrive in the mail.

Can you get denied after preapproval?

In some cases, yes. For instance, if your credit or financial situation changed between the time you received a preapproved offer and when you applied, you might get denied.

Can I get a credit card if I am not preapproved or I don’t qualify for a credit card?

Yes, you don’t need to get preapproved for a credit card; it simply nixes a few steps and boosts your odds of getting a card. However, you will need to qualify for a credit card to get it. This happens if you meet the credit card company’s lending criteria. If you do, you’ll have a chance of getting a particular credit card.

Should I still apply if I am not preapproved for a credit card?

Just because you aren’t preapproved doesn’t mean you won’t be able to get a particular credit card. Spend some time doing your homework to figure out which cards are a good fit for your needs and financial situation. When choosing a credit card, it’s important to check the rates, credit limits, and fees.

Photo credit: iStock/akinbostanci

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Nov

2022

What Is a Black Credit Card? How It Works

By Jennifer Calonia | Credit, credit card, Financial Independence | Comments Off

Colloquial references to a black credit card typically refer to the American Express Centurion Card that launched in 1999. It quickly developed a reputation for being more than a credit card — rather, it became a status symbol of ultra-wealth and limitless spending power reserved only for the elite.

The rumored black card requirements — such as a steep minimum spending criteria — add more intrigue to this luxury card. Here’s a look at how to get a black credit card, as well as the black credit card’s benefits and drawbacks.

What Is a Black Credit Card?

A black credit card is an ultra-luxury private banking credit card product that’s designed to support the credit needs of the world’s upper-echelon, including A-list celebrities, professional athletes, and multi-millionaires..

Although the black credit card meaning was originally derived from the AmEx Centurion Card, it now includes other luxury cards that have since come to the market. The list of exclusive card products include the Dubai First Royale Mastercard and the J.P. Mortgage Reserve Card.

Although the Mastercard Black Card might have the phrase “black card” in its name, it’s more accessible and arguably not in the same caliber as the aforementioned cards. That’s because consumers can submit an application online for this card without first being invited, which is more in line with typical credit card rules.

How Black Credit Cards Work

Unlike other consumer credit cards, the most exclusive black credit cards aren’t available for online applications. Card issuers publish very limited details — if any at all — about how to apply for the card or what it takes to receive an invitation. All of the elusiveness only enhances the allure of black cards.

Aside from their exclusiveness, black cards are generally known for having no credit limit, allowing members to spend freely. However, credit card issuers have already determined who they feel is financially capable of wielding the black card’s limitless buying power.

Requirements for Getting a Black Credit Card

Specific black credit card requirements and thresholds vary between black card products. However, they generally include the following factors:

• Minimum annual spending

• Income and/or net worth

• Creditworthiness

If you believe that you meet the criteria for a black credit card, you can reach out to the card issuer directly to see if you’re eligible. American Express, for instance, offers an online form for its Centurion Card for those who want to request consideration.

What Kinds of Perks Do Black Credit Cards Offer?

Whether you’re still learning how credit cards work or are experienced with credit, you likely know that different cards offer varying benefits, including rewards, travel and shopping credits, and more. The perks of a black credit card also differ depending on the type of black card.

For example, the AmEx Centurion Card, offers the following black card benefits:

• VIP airport lounges. Access to AmEx’s Global Lounge Collection, including the coveted The Centurion Lounge.

• Travel accommodation enhancements. Upgraded bookings and credits through AmEx’s Fine Hotels and Resorts and The Hotel Collection programs.

• Airline loyalty status. Complimentary top-tier status through airline partner loyalty programs.

• Unique experiences. Access to one-of-a-kind travel experiences around the world.

• Travel inconvenience credit. Up to a $250 credit per traveler for carrier-related inconveniences, like cancellations, delays, and more.

• Travel insurance. Up to $100,000 in travel medical assistance, and up to $1 million in travel accident insurance.

• Rental car insurance. Up to $75,000 in car rental loss and damage insurance.

• Lost baggage insurance. Up to $1,200 per trip for lost checked baggage.

• Saks Fifth Avenue credit. Quarterly $250 shopping credit, up to $1,000 per year.

• Equinox fitness club membership. Access to clubs in multiple countries.

• Additional buying protection. Purchase protection, return protection, and extended warranty for goods purchased on the card.

• Personalized support. Access to personal shoppers and 24/7 personal concierge service.

Recommended: What is a Charge Card?

Pros and Cons of Using a Black Card

As a card that’s not intended for the masses, the card’s pros and cons highly depend on which side of the eligibility spectrum you fall under. Here’s a closer look at black credit card benefits and drawbacks:

Pros of Using a Black Card	Cons of Using a Black Card
No credit limit	Accessible by invitation only
Status symbol	High initiation and annual fees
Luxury perks	High spending requirement
Tailored service experience	High income requirement

Is a Black Credit Card Worth It?

With a reputation of having excessively high annual fees and high minimum spending criteria, an important credit card consideration for a black card is ensuring that you can afford it — that is, assuming you’ve received an invitation in the first place.

Weigh the black card benefits, and consider if you’d actually be using a credit cardin such a way that it would be worth it for your needs.

Recommended: When Are Credit Card Payments Due?

The Takeaway

Black cards are reserved for elite customers who have demonstrated the ability to spend thousands of dollars and repay that amount with ease. If you’re an everyday consumer or it’s your first time getting a credit card, a flashy black card probably isn’t a practical credit card solution.

However, a card with solid perks can be a reliable daily option. The SoFi Credit Card lets you earn generous cash-back rewards points.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.¹

Take advantage of this offer by applying for a SoFi credit card today.

FAQ

What does it mean to have a black credit card?

Being invited as a black card member means that you’ve met the card issuer’s underwriting criteria in terms of having a high income, high net worth, high spending activity, and more. It’s perceived as being a card that’s only accessible to the ultra-wealthy and elite.

How much does a black credit card cost?

Black credit card fees vary between card products but often cost hundreds to thousands of dollars in annual fees each month. The AmEx Centurion Card, for example, has a $10,000 initiation fee and a $5,000 annual membership fee thereafter.

Are black credit cards actually black?

Generally, black credit cards are designed with a black color scheme. However, some elite private banking cards that fall into the exclusive black card circuit aren’t black. For example, the JP Morgan Reserve card is made of brass and palladium, and has a silver metal finish.

What is the difference between a black card and a platinum card?

The AmEx Platinum Card is more accessible to consumers than the AmEx Centurion Card, also dubbed the black credit card. Members who want to apply for a Platinum Card can do so on their own online, while the black card is offered by invitation only. The requirements and annual membership fees of both cards also vastly differ.

Photo credit: iStock/Lemon_tm

¹Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

¹See Rewards Details at SoFi.com/card/rewards.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Nov

2022

How Much Is Flood Insurance for Renters on Average in California

By Kim Franke-Folstad | Insurance, servicing | Comments Off

The average annual cost of flood insurance through the National Flood Insurance Program (NFIP) is $850 for California homeowners. But renters, who would only be insuring their personal possessions and not the building they’re in, can expect to pay much less for their coverage.

The cost of insuring your rental home’s contents still can vary significantly, depending on several factors, including if you live in a high-risk area, the coverage amount you want, and the deductible you choose.

Read on to learn more about purchasing flood insurance as a California renter, including what it can cost and why you might choose to purchase a policy to protect your belongings.

What Is Flood Insurance?

While most renters insurance policies cover some types of water damage (from a burst pipe or an overflowed toilet, for example), a standard renters policy typically doesn’t cover flood damage that comes from outside the home or from underground sources.

To be sure your furniture, electronics, and other belongings are protected if waters rise and flooding affects your rental home, you may need to buy a separate flood policy that will help you repair or replace what you’ve lost.

How Can Renters Get Flood Insurance?

Most people get their flood coverage through the NFIP, which is managed by the Federal Emergency Management Agency (FEMA). The NFIP works with a network of insurance companies across the country to provide policies.

FEMA’s flood insurance for renters and others isn’t sold directly by the federal government. Instead, you can purchase an NFIP policy through an authorized insurance company, under what’s known as a Write Your Own (WYO) program. The NFIP works with more than 50 insurance companies, so if an agent or broker helped you purchase your renters or auto policy, you can probably work with that same person or organization. If not, you can get help finding an NFIP provider online at FloodSmart.gov, or you can call the NFIP at 877-0336-2627.

You also may want to check into private, non-government-backed flood insurance policies that may be offered in your area. These policies have different coverage limits, premiums, and deductible amounts than what an NFIP policy offers and can be a good fit for some needs. Just be sure your quote is coming from a stable company that is capable of paying out claims in the event of a major flood.

What Is Covered by Flood Insurance?

The NFIP offers two types of flood coverage. You can get a policy that covers a building only, a policy that covers only the contents in the building, or you can get coverage for both a building and its contents.

It’s up to a building’s owner to decide whether to buy flood insurance for their structure. Renters only have to worry about getting coverage for the possessions they keep in their rental condo, apartment, or house.

What does flood insurance cover for renters? An NFIP contents-only policy can provide up to $100,000 in personal property damage and typically covers items like:

• Personal belongings, including clothing, furniture, and electronic equipment (TVs, computers, etc.)

• Valuables, such as original artwork (up to $2,500)

• Portable and window air conditioners

• Washer and dryer

• Microwave or convection oven

• Rugs

• Curtains and other window coverings

What Isn’t Covered by Flood Insurance?

Most personal property kept in a basement — including money, furniture, clothing, and electronics — won’t be covered by NFIP flood insurance. So if you’re renting a basement apartment (even if it’s a walkout basement), you’ll want to be clear about what can and can’t be insured.

Items you keep outside the building also may not be covered under an NFIP policy, including your car, bicycle, or plants.

NFIP flood insurance also won’t cover the costs you may incur if you must move to temporary housing because of flooding damage. (If you have renters insurance with “loss of use coverage,” you may be out of luck there, too. Loss of use coverage typically pays out only when the reason you’ve been displaced is covered by your renters policy — and as noted above, the standard renters policy doesn’t cover flooding damage.)

Keep in mind that private flood policies may have different coverage exclusions.

Recommended: The Cost of Repairing a Plumbing Leak

Is Flood Insurance Required for California Renters?

Flood insurance isn’t legally mandated for renters in California, or anywhere in the U.S. And though your landlord can require renters insurance, a landlord can’t make renters purchase a separate flood policy.

However, if you feel your personal property could be at risk, you may want to consider adding flood protection.

Residents may worry more about their risk from earthquakes and wildfires, but according to the Public Policy Institute of California, much of the state is vulnerable to flooding. The valleys are susceptible to overflowing rivers. Some coastal areas are unprotected from high tides and storm-driven waves. Deserts and areas burned by wildfires may be hit by flash flooding. And urban areas with poor drainage systems and lots of concrete are at risk of flooding from heavy rains.

FEMA says just one inch of floodwater can cause up to $25,000 in damage. And without a flood policy, the cost of replacing your ruined belongings would fall to you.

How Can You Assess Your Rental’s Risk?

Knowing your designated flood zone can help you decide if you want to prioritize purchasing flood insurance for your rental. You can find your zone by entering your address at the FEMA Flood Map Service Center at MSC.FEMA.gov. Buildings in zones A and V are at the highest risk for flooding, while those in zones B, C, and X are considered at moderate risk.

Even if you don’t live in a high-risk zone, you can still experience flood damage. More than 20% of all insurance claims come from moderate- to low-risk flood zones, according to NFIP data.

If you’re new to the state or your city — or even if you’ve just moved to a new building — you may want to speak with your neighbors or landlord about the history and potential for flooding.

How Much Is Flood Insurance for Renters?

The NFIP offers contents-only policies for as low as $100 annually. Your premium can vary based on several factors, including the items you plan to protect and their replacement cost.

Remember, with an NFIP contents-only policy, the maximum amount of coverage you can get is $100,000. If your needs go beyond that threshold, you may want to consider buying excess flood insurance through a private flood policy. Or you may find a private policy alone is a better fit for you.

If it seems as though adding a flood policy on top of the cost of renters insurance might be beyond your budget, you may be able to lower the premium by raising your deductible amount. And your insurance agent can probably make other suggestions to keep the cost down.

It might make sense to sit down and look at how renters insurance for flooding would fit — along with life, car, health, and standard renters insurance — as part of your overall personal insurance planning. Don’t put off the decision to purchase until forecasters are predicting a potential flood event, though. There is typically a 30-day waiting period for an NFIP flood insurance policy to go into effect.

The Takeaway

FEMA offers flood insurance for renters, known as contents coverage, for as low as $100 a year through the National Flood Insurance Program (NFIP). But the cost of an NFIP policy or a private (non-government-backed) flood policy can vary significantly depending on where you live and what you want to protect. Flood insurance is a standalone policy, so the premium would be on top of whatever you may be paying for renters insurance. (Most renters insurance policies don’t cover flood damage.)

While SoFi doesn’t offer flood insurance, the National Flood Insurance Program offers coverage that can protect you from expensive damage.

If it’s time to reevaluate your overall insurance plan, SoFi can help. SoFi teams with top carriers to help you get reliable coverage with the convenience of shopping for insurance online. With SoFi Protect, you can search for the coverage you need — for your home and belongings, life, and car — at a price you can afford.

Let SoFi help you build a plan that protects the people and things you love.

FAQ

Is there flood insurance for renters?

Yes. Renters can get contents-only insurance through the National Flood Insurance Program (NFIP) or a private (non-government-backed) flood policy.

Can my landlord require flood insurance?

No. Flood insurance is not legally mandated in any state, and landlords can’t require renters to carry it.

Will my bicycle, kids’ toys, and other things I store outside my apartment be covered by flood insurance?

An NFIP contents-only policy won’t cover items that are kept outside, and there are also limits on what an NFIP policy will cover in a basement.

Photo credit: iStock/Cunaplus_M.Faba

Insurance not available in all states.
Gabi is a registered service mark of Gabi Personal Insurance Agency, Inc.
SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Nov

2022

How Much More Is Car Insurance for a Sports Car?

By Ashley Kilroy | Insurance, servicing | Comments Off

Insurance for a 2022 model sports car costs on average $2,152 annually. The cost difference between insuring a sports car and a standard vehicle can range from a couple hundred dollars to a few thousand dollars. The average cost for a conventional car is $1,567.

To help you decide if purchasing a hot new ride makes sense, we’ll provide details about how much insurance costs for a sports car, and the factors that can raise or lower your premiums.

Recommended: How to Get Car Insurance

What Is Sports Car Insurance?

“Sports car” is a common term used for small, low-built cars designed for performance at high speeds. Sports car insurance then refers to typical auto insurance for a sports model. Drivers generally have to pay more to insure a sports car because of the higher sticker price and greater perceived risk.

Sports cars usually have top-of-the-line engines that drivers can easily push to high speeds, upping the likelihood of an accident or speeding ticket. Sports cars tend to be more expensive to repair and replace because their parts are costly to manufacture. As a result, insurers charge drivers more to cover sports cars.

Need to brush up on your vehicular vocabulary? Check out our roundup of car insurance terms.

How Much Does Insurance Cost for a Sports Car?

For a 30-year-old driver, sports car insurance can range from $1,857 for a Mazda MX-5 to $4,823 for a Maserati Quattroporte S GranSport. Keep in mind that these numbers are averages. Your costs will depend on many factors, such as your age and the age of the car, security features installed in the vehicle, the state you live in, and how much you drive.

Parents and teens alike may benefit from our insurance tips for first-time drivers.

Recommended: How to Lower Car Insurance

Average Cost of Insuring a Sports Car

See below for the average cost of insuring a sports car, by make and model:

Make and Model	National Average Rate
Maserati Quattroporte S GranSport	$4,823
Maserati Ghibli S Q4 GranSport	$4,208
BMW M8 xDrive	$3,907
Audi R8 5.2L Spyder Quattro	$3,863
Nissan GT-R Nismo	$3,829
BMW M5 Competition xDrive	$3,777
Tesla Model S	$3,567
Porsche 911	$3,261
Dodge Charger	$2,930
Jaguar F-Type	$2,751
Dodge Challenger	$2,317
Chevrolet Corvette	$2,420
Mazda MX-5 Miata	$1,857

What Do Insurance Companies Consider To Be Sports Cars?

While insurance companies don’t have a strict, universal definition for sports cars, they typically have powerful engines with more horsepower but weigh less than sedans. Sports cars get their name from the sport of racing, which inspires their engine specs and body shape. Manufacturers design sports cars to be small, fast, and maneuverable.

Car enthusiasts and connoisseurs appreciate the expertise and craft that go into making sports cars. But anyone can get behind the wheel of these thrilling and potentially dangerous vehicles. Those dangers have financial implications, so insurance companies charge increased premiums. Still, it’s possible to find affordable car insurance for many sports models.

What Coverage Do You Need for a Performance Car?

Because of a sports car’s higher value, drivers tend to choose maximum vehicle coverage over minimum car insurance. Full coverage can vary but tends to include the following:

Liability Insurance

If you’re at fault for an accident, liability insurance covers the cost of injuries and property damage to the other people involved. It can also cover legal fees and court costs if someone sues you after an at-fault accident. Most states require some level of liability insurance.

Comprehensive and Collision

This coverage provides complete damage coverage for your vehicle, whether it’s beat up by a storm or after an accident. If you lease or finance your sports car, your leasing agent or lender will likely require this coverage.

Uninsured / Underinsured Motorist

UM coverage protects you if you collide with someone with limited or no auto insurance. In an accident where someone else is at fault and they don’t have enough insurance, UM will cover your medical bills up to policy limits. Some states require UM coverage.

Recommended: How Much Car Insurance Do I Need?

Personal Injury Protection

PIP insurance covers medical bills, lost wages, and funeral expenses after an accident, no matter who caused it. Some states require this type of coverage.

Gap Insurance

When a newer car is totaled, standard insurance will reimburse you the car’s actual cash value (ACV), which may be less than the amount left on your loan or lease. Gap insurance covers the gap between the vehicle’s ACV and the amount you owe, minus the deductible.

Learn more about how gap insurance works.

New Car Replacement

New car replacement operates similarly to gap insurance by covering the cost of purchasing the same make and model vehicle that was damaged — after the deductible.

Which Sports Car Has the Cheapest Insurance?

The sports car that’s cheapest to insure is the Mazda MX-5, with an $1,174 average premium, per Quadrant Information Services. That may be because Mazda is known as one of the safest car brands on the market, according to U.S. News.

For a deep dive into the process, read this take on how to get car insurance.

Which Sports Car Is the Most Expensive to Insure?

According to Kelley Blue Book, the Maserati Quattroporte S GranSport is one of the most expensive sports cars to insure, costing $4,823 annually on average. Maserati is a renowned exotic car manufacturer, whose vehicles are both expensive and exclusive. The Quattroporte is a supercharged luxury sports sedan.

Recommended: How To Save on Car Maintenance Costs

How Can You Save Money on Sports Car Insurance Rates?

Although sports cars are expensive to own, you can lower the cost of car insurance with the following tips:

Take Advantage of Discounts

Insurance companies reward drivers with discounts for various efforts, such as avoiding tickets and driving less. As a sports car driver, you can do the following to reduce insurance costs:

• Install an anti-theft device.

• Do the bulk of your driving with another car. For example, you could commute with an economy car and take your sports car out on weekends.

• Keep a clean driving record free of accidents and tickets.

• If you have multiple vehicles, insure both with the same company for a price reduction.

• Purchase your homeowners or renter’s insurance from the same company providing your auto policy to receive a discount.

• Pass a driver safety test.

• Install a tracking device to record your driving habits.

Increase your Deductible

Deductibles and premiums have an inverse relationship. If you choose a high deductible (what you pay before your insurance covers the remaining costs), your monthly premiums fall. Therefore, you can change your policy to take on more of a financial burden if you get into an accident, making your policy more affordable on a monthly basis.

Shop Around

You don’t know what you don’t know, and that is very true of insurance costs. Requesting quotes from multiple insurance companies allows you to compare insurance packages and find the best price. Regular personal insurance planning sessions can make sure you’re saving money on all of your policies.

Switching car insurance may seem counterintuitive if you think you have an excellent price, but it doesn’t hurt to check. Bundling is often helpful in reducing insurance costs, but you might find an outstanding deal with an insurer that beats the discount your current insurance company offers. Specifically, online insurance may offer lower rates than traditional insurers.

The Takeaway

Sports cars are fast, fun vehicles that make driving exciting — and expensive. While their agility and speed are enjoyable, their insurance costs can be prohibitive, especially for younger drivers. However, you can reduce insurance costs by avoiding the most expensive sports cars, such as Maseratis and Audis, and driving more modestly priced models like the Mazda MX-5 or Chevrolet Corvette. Also, older “classic” sports cars don’t have the same insurance upcharge as newer models. And of course, it pays to keep a clean driving record.

Whether you’re considering a sports car, auto insurance, or other significant financial decision, shopping around is crucial. SoFi’s auto insurance tool allows you to compare rates from the top insurers to help you get the best deal. You’ll find rates in real time with no finagling.

SoFi streamlines your insurance shopping journey to make sure you arrive at a good price.

FAQ

Is it more expensive to insure a sports car?

Sports car insurance costs about $1,850 to $4,800 annually, depending on the car model and age. Conversely, conventional cars cost about $1,728 to insure in the United States on average.

Does insurance go up when you buy a sports car?

Since sports cars tend to be faster than standard cars (which increases the probability of an accident), it usually costs more to insure one.

How can I lower my insurance on my sports car?

You can lower your insurance on your sports car by building a favorable credit score, maintaining a clean driving record, bundling multiple types of insurance, and fulfilling specific conditions from your insurance company. For example, you might install a car alarm or reduce your monthly miles driven to receive discounts on your premium. Also, shopping amongst insurance companies for the best deal can help you find a lower rate.

Photo credit: iStock/Arand

Nov

2022

How Much Is Car Insurance for a Truck on Average?

By Jacqueline DeMarco | Insurance, servicing | Comments Off

If you’re considering buying your first truck, you may be wondering how much the insurance is going to run. While the cost of insuring a truck varies based on a few factors, the national average is $1,731 per year — about the same as car insurance.

Keep reading for more insight into how much truck insurance costs, and how to lower your premiums.

Recommended: How to Lower Car Insurance

Differences Between Auto, Truck, and Commercial Truck Insurance

There are really only two types of auto insurance. The type of auto insurance you need depends on what purpose you’ll use your vehicle for.

• Personal auto insurance. If someone wants to buy or lease a truck for personal use, then they’ll need a personal auto insurance policy. This may be referred to as auto insurance or truck insurance.

• Commercial auto insurance. Companies that use cars and trucks for business purposes need this policy instead.

Both types cover property damage, bodily injury, and legal expenses related to auto accidents. Commercial auto insurance takes coverage a step further, usually featuring higher claim amounts and protection against more complex legal issues.

Curious about the legal minimum insurance drivers can carry? Find out about minimum car insurance requirements by state.

How Much Does It Cost to Insure a Truck?

Exactly how much is insurance for a pickup truck? The average annual cost of personal auto insurance for a truck is $1,731.

The typical cost of commercial truck insurance depends on the type of business. Transport truckers haul general freight, such as automobiles, food, and products for retail stores. Specialty truckers cover a single type of freight, like logs or garbage. The average annual premium for commercial insurance is $640 for specialty truckers, and $982 for transport truckers.

Recommended: The Cheapest Way To Rent a Car

Does It Cost More To Insure a Truck or Automobile?

It isn’t necessarily more expensive to insure a truck over a car. Trucks are actually the second cheapest vehicle type to insure.

One exception is the age of the driver. College students may have a harder time finding affordable car insurance for their truck.

Average Cost of Car Insurance for Truck by Make and Model

How much is insurance for a new truck? Below are the average monthly rates for 10 major truck makes and models. You may figure out at a glance whether it’s worth switching car insurance companies.

Make and Model	Average Liability Rates	Average Collision Rates	Average Comprehension Rates	Average Full Coverage Rates
Chevrolet Colorado	$21	$37	$31	$102
Ford Ranger	$21	$39	$31	$105
Ford F-150	$27	$39	$31	$110
RAM 3500	$22	$33	$48	$121
GMC Sierra 1500	$28	$50	$31	$122
Toyota Tundra	$28	$44	$35	$122
Chevrolet Silverado 1500	$27	$47	$35	$124
RAM 1500	$30	$47	$35	$127
Ford F-Series Super Duty	$27	$51	$39	$132
Chevrolet Silverado 2500HD	$30	$57	$35	$138

Make and model aren’t the only things that determine auto insurance prices. For example, first-time drivers are more likely to pay more for auto insurance.

What Is the Cheapest Pickup Truck to Insure?

Many factors can impact the cost of car insurance, such as the type of deductible you choose. Generally, the Chevrolet Colorado is one of the more inexpensive pickup trucks to insure with an annual average full coverage rate of $102.

It’s important to note that even if someone chooses a model that is known to be inexpensive to insure, their personal driving history impacts the insurance rate they’re offered. A driver with a clean record typically will get a better rate, whereas the same insurance goes up after an accident.

Cheapest Car Insurance Companies for Trucks

It’s always a good idea to shop around to get several quotes (you can include traditional insurers and online insurance companies. This will give you a good idea of which companies offer the most complete coverage and affordable rates.

There are several ways to lower your car insurance, but the easiest may be to choose a higher deductible. The following companies offer the lowest annual rates for car insurance, per U.S. News:

Insurer	Annual Premium
USAA	$1,000
GEICO	$1,148
State Farm	$1,267
Nationwide	$1,327
Travelers	$1,371
American Family	$1,372
Progressive	$1,533
Farmers	$1,917
Allstate	$2,047

Before shopping for quotes, it’s helpful to brush up on car insurance terms to better understand what type of coverage each provider is offering.

Truck Features That Impact Insurance Costs

Truck features don’t directly impact the cost of insuring the vehicle — unless they increase the overall cost of the car. The more expensive a truck is, the more it costs to insure.

Any features that increase the likelihood of theft or the cost of maintenance and repairs can also drive up the price of insurance for trucks.

Recommended: How To Get Car Insurance

The Takeaway

The average annual rate for personal car insurance (as opposed to commercial) for a truck is $1,731. The overall cost of the truck greatly impacts the price of insurance. The more expensive a truck is, the more it costs to insure it. For this reason, special features may also increase your cost. Perhaps surprisingly, truck insurance is not more expensive than car insurance. In fact, pickups are the second cheapest model to insure.

Are you paying too much for truck insurance? SoFi makes it possible to compare multiple auto insurance rates from top companies, without having to visit multiple websites.

Real rates, with no bait and switch.

FAQ

Do trucks cost more to insure than cars?

Generally, trucks don’t cost more to insure than other types of cars. They’re actually usually the second least expensive type of car to insure. How much it costs to insure a car is usually based more on the overall cost of the car than the type of car someone chooses to drive, so an inexpensive truck may cost much less to insure than a luxury SUV or sedan.

Is insurance high on a pickup truck?

Insurance isn’t necessarily high on a pickup truck. Trucks usually cost less to insure than other types of cars. That said, high-value pickups can cost a lot to insure. The higher a truck’s (or any car’s) price, the higher the insurance premiums.

Photo credit: iStock/JMichl

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