I called in for insurance quotes on some cars I’m considering purchasing. Quotes are for Minnesota with Geico, 6 month premiums, full glass, comprehensive coverage, with a $500 deductible, for my zip code (in the city) and age (over 25).

  • 1993 Chevrolet Lumina: $360 (what is this doing here? I’m driving this now.)
  • 2005 Infiniti G35 sedan: $666
  • 2008 Volkswagen GTI (2.0T): $706
  • 2004 Volkswagen R32: $737
  • 2007 Mazdaspeed3: $737

Saving $77 for a 6 month renewal over 5 years is $385 (around 2% of the purchase price) savings for the G35 sedan over one of the hot hatches. However the savings is lost when fuel is considered. Here is my math, feel free to double check it: If I drive 10,000 miles per year with the G35 and I assume it gets 23 MPG in mixed driving (city/highway), that works out to 434 gallons of fuel per year. At $3/gallon, that is $1302 for 10,000 miles.

For one of the hatchback, assuming 28 MPG mixed driving, that is 357 gallons for 10,000 miles, at $3/gallon, works out to $1071 in fuel.

Annual fuel savings for 28 MPG over 23 MPG is $231. Savings over 5 years is $1155. When fuel and insurance are considered, the better deal is one of the hatchbacks, with a 5 year savings of $686 (again, just 3-5% of the purchase price, rather negligible).  The gist with these cars: fuel savings is more significant than insurance savings.