By on December 21, 2012

Brazil has some of the highest car prices in the world. Taxes, protectionism and high margins, coupled with the fact that Brazilians are gobbling up each and every car built in Brazil guarantees that this fact of life will not change any time soon. On top of that, Brazilians must pay 4 percent of the car’s price each year as tax.

Another hurdle to overcome in order to stick that shiny metal blob of your dreams in your garage is insurance. Relatively low coverage, relatively high theft rates and lots and lots of accidents are the excuses insurance companies use to get quite a chunk of change out of their customers’ pockets and into their own. As you can see from the video, even those who should protect you, can be out to get you.

Webmotors, a well-know Brazilian enthusiast site, recently did a run down of just how much it costs to insure the top ten most sold vehicles this year. They used the profile of a 40 year old male living in the South Zone of São Paulo. The beloved VW Gol, the most sold car in Brazil for over 25 years and going, will force its owner to fork over almost 10 percent of the car’s price in order to get it insured. Just one of a myriad of reasons I have for never, ever, contributing my hard-earned money to keep this legend alive.

Below is a table showing the lowest annual insurance premium Webmotors was able to find for popular Brazilian entry models. The premiums were converted to US dollars at today’s rate of $.48 to the Brazilian real.

Annual cost to insure an entry level car in Brazil
Car Annual Insurance Percentage of Car’s Price
VW Gol $985 9.43%
Fiat Uno $801 7.48%
Fiat Palio $764 7.52%
VW Fox $1,093 5.46%
Chevy Celta $671 6.75%
Ford Fiesta $687 5.91%
Renault Sandero $514 4.50%
Chevy Classic $621 4.75%
Fiat Siena $669 5.38%
VW Voyage $493 3.80%

Don’t know about you, but I hate paying for insurance. My cars have never been robbed, I almost never get into an accident, in short, sometimes I feel like it’s wasted money. I for one am keenly aware of these numbers and they carry a lot of weight when I’m deciding which car to buy.

So, I want to know: Do you factor in the cost of insuring a car when you buy one? Or do you consider the cost of such so marginal that it simply isn’t a factor?

What do I hear? You pay much more for your BMW 550i? Ah, the land 0f plenty.

 

#WE

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35 Comments on “Brazil: Insurance Another Hurdle to Car Ownership...”


  • avatar
    Robstar

    Hi Marcelo, good to see another story on ttac from you!

    This does not surprise me one bit.

    My brother-in-law in Brazil recently was hit (1970′s beetle) and the person took off. A witness got the license plate & my brother-in-law called the police to report the accident.

    The police found the other driver (who didn’t have insurance) and went to his house & took some details but did NOT otherwise fine or arrest him (!!!!) since my brother-in-law was not hurt.

    Last I heard about this was almost a month ago. I need to check with my wife to find out if there have been any updates since…..

    My brother-in-law did end up selling the car to a relative, so I guess it’s not really his problem anymore.

    Also: Are these insurance rates for “full coverage”, or “liability only” ? If these are the “full coverage rates”, are the “liability only” policies much cheaper? What deductible do these have?

    Robstar

    • 0 avatar

      Hah! Your brother-in-law got hit by an insurance-less car? He didn’t get hurt? Nothing, zilch, nada will come of it.

      • 0 avatar
        Robstar

        That is exactly correct.

        What really irks me is that the guy who hit him & didn’t even stop!

        My brother-in-law could have been seriously injured but the person didn’t even stop to check!

      • 0 avatar
        otter

        Here is an interesting contrast: A few years ago, when I was in India for a friend’s wedding in Bangalore, the vehicle we were in one day was hit by a driver that changed lanes into us. Minor sheetmetal damage to the front fender. We both stopped (in the middle of traffic) and a policeman was summoned. He took statements from both drivers about what happened and rendered a judgement on the spot, with payment also made from one driver to another on the spot. This can work out not so well for the not-at-fault driver, as in cases like ours the driver is in his employer’s car, not his own, and if the cost of repair exceeds the payout on-scene, he ends up being liable to his employer for the difference, which can be a very large amount relative to what he is paid. Insurance apparently did not ever enter into the scenario!

  • avatar
    fredtal

    If you pay cash for your cars and are a safe driver and willing to chance it just get liability and save a lot of money

  • avatar
    lowsodium

    Those annual prices arent that bad. Dont they pay a ton in Britain too?

    • 0 avatar

      Don’t know about England, but 5-10% for entry level cars seems to me excessive. I think something like 2 to 4% would be more reasonable. I’ve had insurance on my cars for over 20 years. In that time, I’ve used their services 3 or 4 times. In return I’ve bought them anywhere from2 to 3 cars(or more since for most of that time I’ve had 2 cars inured). I think on balance they’ve benefited much more than I from our relationship.

      • 0 avatar
        Robstar

        I can ask the guy in our london office what he pays on his X5 after he’s back from Vacation.

        I’m pretty sure he pays, for a 1989′ish 900cc sportbike something like 2000ukp anually for liability only.

        That is about $270 USD/month for a motorcycle that here would cost about $1500…I need to double check that number, but it was something scary expensive like that. He is 21, btw, but a clean driving record.

      • 0 avatar
        28-Cars-Later

        I’m with you on insurance sometimes feeling a waste of money, I was hoping a few years back when the powers that be were wailing on health insurance companies they would hit car insurance too, but I digress.

        My insurance is $700/year on my 2008 Pontiac and $300/year on my 1998 Saturn (liability only). While my Pontiac isn’t an entry level car I bought for just under $12,000, so I am paying a hair over 5% for full coverage on it based on my purchase price. If you base the insurance figure on MSRP, that 5% figure is at least halved although I think they may up charge you a bit more for brand new. Still based on your figures it seems they are really sticking it to Brazilian drivers.

        I think honestly there is just a floor no matter what you drive, and the floor price is just too high.

      • 0 avatar

        Couldn’t agree more 28-cars-later! On all points.

    • 0 avatar
      iainthornton

      It depends where you live, mostly. And age. I’ve known teenagers in bad areas (particularly Scotland) to pay thousands for very basic cars, but then my father pays £350/year for a Range Rover Supercharged. He’s in his late 40s and lives in a good area.

      My insurance is fairly high because I live in the centre of a city. I always seem to get fairly good rates compared to my peers. I think I just research it more, I suppose.

  • avatar
    krhodes1

    Doesn’t enter into it at all for me. Old enough, clean enough record, and in a cheap enough place to live where the car is largely irrelevant to the cost of insurance. I pay the same amount for a year old BMW as a ten year old Grand Cherokee. $<600/year for well over state minimums, comp and collision. 75% of that is for the liability coverage.

    It would truly suck to live somewhere expensive! My colleagues in MA get raped.

    • 0 avatar

      I pay about $1k to insure my 12 year old Subaru RS and that is without C&C. Its BB value is about $3500.

      My driving record is perfect and I am in my 40s. I live near Seattle.

      A friend of my same age, in my same town, pays about the same for full coverage on his 2011 Mustang. Grr.

      (I have also checked a half dozen companies for pricing. I don’t know why but this darn Scooby is just really expensive to insure… and I don’t even have a turbo.)

      I am very sensitive to insurance costs and I am unlikely to stomach paying more than $1k/year for ANY car.

  • avatar
    Dimwit

    Marcello, I’d love to have your rates! I pay over $1,600 Cdn a year for insurance on a 2004 Jetta. And I’m cheap! Most here pay by the month because rates are so high. Yeah, it’s a ripoff but it legislated robbery.

    • 0 avatar

      I’m paying about 800 reais (400USD) on a 2008 Renault Logan (lowest car to insure in Brazil right now) whose market value is something like 22 000 reais (11k USD). I also pay about 1100 reais (550) for a 2005 Ford Ka whose market value is 12500 reais (6250 dollars).

      The evil twist is the ‘franquia’. This is a payment I have to make for the insurance company in order to get my claim honored. It hovers around 750 dollars for each car. So, considering yearly bonuses I get when I don’t use the insurance, if I do use my insurance, those values are in fact doubled.

      Pretty sure you guys in the US don’t have to pay ‘franquia’ to use your insurance.

      • 0 avatar
        Robstar

        Is franquia like a deductible?

        A deductible in the US is an amount you pay out of pocket that is not covered by insurance.

        For example: My deductible is $500 USD. That means if I get in an accident for $3,000 of damage, I will only be reimbursed $2500, and I’m expected to pay the other $500 to the mechanic. In cases where you are not at fault AND the other person has insurance, this deductible can sometimes be collected from the other insurance company & returned to you by your insurance company.

        This keeps people from filing claims every time their car gets minor damage or vandalism. A higher deductible also lowers your overall insurance monthly premium, as you are committed to paying more out of pocket. Basically any damage under the deductible isn’t worth filing a claim for since you will have to pay it out of pocket anyhow.

        I don’t know if deductible is the same as “franquia”, but I’ll ask my wife if there is some word in English that is equivalent.

      • 0 avatar

        Hey Rob!

        Thanks for the info. There are some slight differences, but basically franquia is deductible. The only case in Brazil in which you don’t pay the deductible, or franquia, is if someone hits you and their insurance covers you. But if you hit some one or your car is stolen, the deductible must be paid. Also, it is paid to the insurance company and not the mechanic directly.

      • 0 avatar
        Sydcam

        We have the same thing in the UK. We call it ‘Excess’.

        It can either be compulsory as part of the policy – my Mum has £100 compulsory excess but a young 20-something like myself has £500 and for a 17 year old who just passed I wouldn’t be shocked to see £1000 excess – and you can add voluntary excess as well in order to lessen your premium on top of this.

    • 0 avatar
      Acubra

      Looks like it really sahcks to be stationed in GTA, eh?
      40% of that for an ’04 Saab 9-5 here in Cowtown, AB.

  • avatar
    Detroit-Iron

    Marcelo

    In the US the cost of the vehicle is an almost insignificant portion of the cost of the insurance.

    The number one factor is your credit rating (are you going to pay your premium) and number two is how much coverage are you buying.

    Because the hospital stay is payed by the at fault driver, and health care in the USA is expensive, the replacement cost of the vehicles is not very important.

    • 0 avatar
      Slab

      Also, the zip code where it’s parked at night. Someone driving a cheap car in a high risk neighborhood is going to pay more than someone driving a luxury car in a “safe” neighborhood.

    • 0 avatar

      Basically insurance rates in Brazil vary on: gender, age, zip code, home or work garage or lack thereof, if there are teen in the house, how much medical coverage your willing to buy, cost, age and make of vehicle (including fuel, diesel cars – mainly PUs in Brazil – have insane rates to high levels of thefts to get diesel engines to run electric motors in more rural areas), and of course if the particular insurance company is feeling like making a run at a particular kind of insurance holder. I may be forgetting a few.

      They don’t vary on: mileage, driving record (at least not for normal drivers, but a ticket or two won’t damage your rate much), credit score.

      Thanks for reading and the info on US guys!

  • avatar
    28-Cars-Later

    Keep up the Brazilian themed articles Marcelo. Between people talking about the upcoming World Cup and economic comments about BRICSs nations, I keep hearing about Brazil but I know little about the nation and her people.

  • avatar
    MK

    I enjoyed my trips to Brasil and found the people very friendly and welcoming. Always liked the look of the Mitsu Pajeros sold down there as well.
    One thing that stood out were the number of multi fuel vehicles on the road down there, that’s just unseen up here.

    That insurance sounds very rough to me given the costs of those cars to replace. I have three vehicles (jeep, porsche and new fullsize truck) with full coverage and $500 USD deductible insured for $196/month. 40-ish, married with a 7 yr old in the house.

    -Thanks for the updates from the other American continent!

  • avatar
    el scotto

    Marcelo,
    here in the states we have to have full coverage insurance if there’s a loan against it. Once your vehicle is paid off you get to decide what kinds of coverage you need. Personally, I just raise my deductible and keep the same coverage. I keep my deductible at inconvenience level but not miss other payments level. Over 10 years old? It get the bare minimum. We’re all supposed to have insurance. Sadly people don’t and ya get to pay for that too. YMMV I consider insurance part of overall fiscal planning.

  • avatar
    redav

    I was in Sao Paulo in June/July.

    One of my coworkers told me about their insurance, and that because of the cost, he does not insure his car. Instead, he saves the money so that after ~8 yrs, he has enough cash to simply replace the car if necessary. I heard many complaints about the expenses of owning a car while I was there.

    As for myself, I recently bought a car, and I checked insurance & maintenance costs before I bought. They are small enough that they aren’t necessarily a go/no-go factor on buying a car; rather, they are a ‘good-to-know.’ But if I had expenses like the 4% annual tax, I wouldn’t even consider buying anything above the bare minimum.

  • avatar
    mypoint02

    If I had multiple tickets on my record and/or accidents I would definitely consider insurance costs before I bought something. But from my experience, what you buy doesn’t seem to make that much of a difference as long as you have a good insurance score and no record. The costs to insure my ’01 BMW 525i were only sightly less than my ’07 530xi – about $725/yr for the 525 vs. $800 for the 530. When I bought the 530 I didn’t even think about the insurance until afterwards. I’m also fortunate that Wisconsin is a pretty low cost state for auto insurance, even though I live in a marginal zip code (half of it is in the city). If I lived in the country it’d be quite a bit less. I guess if I was buying something like an M5 or E63 AMG I might consider it more. But if I had that much money to spend, I probably wouldn’t need to worry about insurance costs anyways.

  • avatar
    WRohrl

    Insurance to pay for your own ride should it become damaged is a minor part of the issue. The real reason you’d want insurance is in the case of you being at fault and hitting not just one other car but causing a chain reaction crash (icy highway maybe??) and all of a sudden half a dozen other vehicles are damaged and maybe someone goes to the hospital (or worse). That’s why the people out there who think the state minimum limits are adequate frighten me. You want someone (the insurance co) on your side when you get hauled in to court by the other parties. They want to protect their assets and you get to ride along as part of your premium. No sense in just giving up your assets or having your wages garnisheed for the rest of your life…

    I became aware of an interesting twist on insurance in Germany recently. Sure you can go as fast as you like on some Autobahns, but if you are exceeding the “recommended” blanket maximum speed limit of 130km/h and cause a wreck you will be partly financially responsible YOURSELF, no matter what insurance coverage you have. i.e. you can legally go faster than the “recommendation” in the unlimited parts of the network, but you dirently share in the consequences should you have a problem…

  • avatar
    alvaro74

    Hi Marcelo!!!
    Insurance cost of VW Gol’s is absolutely mad!! And it hasn’t changed for years, I used to read Quatro Rodas when I was a teenager (sometimes old issues bought used here in Uruguay)and there was always some mention to this matter. I owned two Gols (1.0 G3 2005 and 1.6 G5 2010)and insurance cost for both was about U$D 500/600, the older one being cheaper but not too much (BTW the little girl in my avatar is my daughter and she’s at the Gol G3 wheel). And even more surprising that you will pay half as much as you do for a Gol to insure a Voyage, being just the same car with and added trunk. Obviously it must be because of owner profile, but what a difference!!!
    Parabens!

    • 0 avatar

      Hey Alvaro!

      Great avatar. Congrats on the beautiful baby!

      One of the reasons I have never bought a Gol is for the insurance. It is crazy. Did you ever get the chance to see insurance for the Parati (Gol G4 SW). I remember back when the car cost almost 40k reais, some magazine or another did an article where a lady was quoted 19k reais!!!!


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