The value of your car does affect your insurance, but it is not the only factor involved in calculating your premium. If you have a small car with a .99 liter engine, you will pay less than a luxury model, however the depreciation in value of your car each year will not reduce your premium. The other elements of your policy such as bodily injury, property damage, rental reimbursement and roadside assistance will likely cost more, even when your car is slightly less valuable than the year before.