So I buy a car for 50k for example. And I pay 200 car insurance monthly.
After 3 years car is worth 35k. Why doesn’t car insurance decrease in proportion. Instead, it stays the same.
Why doesn’t car insurance go down?
byu/naturallin inInsurance
Posted by naturallin
23 Comments
Because the price of everything has gone up. Labor and materials for instance.
Also a lot of insurance fraud so we end up paying for their mistakes
You’re really paying for liability mate
It stays the same ? Normally it goes up… you have to switch providers every now and then, just the way it works. If you read a business book on profitability the first idea is always “It’s easier to make money from your existing customers then acquire new customers”, since an insurance company doesn’t have anything to “sell you” for the extra they decided to make off of you, you get the same thing for more price.
Sadly capitalism is just communism but you get to play with the money for a little bit as it goes to the top instead of directly to the top, and the top is private people not just government dictators.
The replacement value of your vehicle is only one piece. Parts and labor and rental cars cost more than they used to so your small comprehensive claim probably costs more to cover now. Not to mention liability – other cars on the road are more expensive than they used to be, medical bills going up, etc.
You need to keep switching insurance companies if you want your insurance to go down
Yes, it may cost less to repair your vehicle, but it costs more to pay the medical bills of the people you could injure with it.
The price or value of a vehicle is only one relatively small factor in insurance pricing. Most vehicles aren’t totalled in an accident, so the cost of repair can be a major factor. Also, both 3rd-party liability and 1st-party medpay are also major factors.
The value may have gone down but cost to repair/parts have gone up. Also, insurance spreads the risk meaning if their losses go up everyone pays the price.
😂😂😂this is funny
because it covers you causing damage to someone else’s vehicle
Your vehicle being three years older doesn’t mean it causes less damage if it’s in a wreck
to be very honest, this is an extremely basic question to ask. you should call your agent and ask them to explain your policy to you
Because everybody else is still having accidents, you’re supplementing their claims.
If they based the cost of insurance on the value of the vehicle you would never be able to afford the initial insurance. The insurer is hedging their bets on how often you’ll file a claim. They are willing to take the risk that you won’t file a claim immediately upon buying a new car. The longer you own it the higher the chance of you filing that claim. The actuaries calculate the odds of when you will file a claim. Your rates are more dependent on that than the value of any car you insure.
In effect they under charge you up front and then over charge you at the back end in attempt to keep the annual rates somewhat flat.
Yeah. So ifbyou take your car and run it into someone today will it do proportionate less damage to them as well?
See that big expensive line item on your policy “bodily injury liability?”
How do you figure you’ll need less coverage for someone else’s body with the car that you own 3 years in the future?
Because every month there’s a new $100,000,000 verdict that insurance companies have to make up for. Juries are out of control and insurance will keep rising until that changes, among multiple other factors.
Profitability issues.
Your vehicle is almost nothing in a claim to an insurer.
The primary driving factor is the liability, not the cost of your first party claim. Of the liability, the primary driving factor is bodily injury, not property damage. To the extent the premium is driven by your first part claim it is driven by the cost to repair your vehicle, not pay for its total loss.
Three main reasons.
Not all own damage losses are significant/write offs. So repairing a dent is the same cost whether you have a new vehicle or one that is a few years old. In fact older cars will find spare parts actually increase
Liability. Your premium pays for third party damage. The age of your vehicle is largely irrelevant.
Also third party injury is where the potentially biggest single claims. All premiums have to contribute to this pot.
I don’t know why car insurance doesn’t go down, even slightly, every year you go without a claim.
It does not stay the same. Usually it goes up.
You’re paying for the car you might hit, and the car your neighbor might hit and the car your neighbor drives that got hit by an uninsured motorist.
Insurance rates drop from your 20’s and flatten out in your 30’s and when you get married and have kids. or move to a better zip code.
Anything other than that you have to shop around every renewal since your rates will go up