Why do my auto insurance rates keep going up even though my car is getting older?
At Allen Drew Insurance Agency, many of our clients ask this question so I would like to address it from a couple of angles.
First things first, even though it’s called car/auto insurance, it covers more than just your car. It should technically be called “auto-owners” insurance, similarly to how home insurance is actually called “home owners insurance”.
It’s important to understand that there are a lot of variables that go into insurance premiums, and with auto insurance, it’s no different.
The insurance company is much more concerned with you crashing into someone and causing them (or yourself) bodily harm, or death, than they are about your car. A car is a material possession which can be replaced. A human life is not.
When is the last time you looked at your auto insurance policy?
If you look at it you’ll notice there are a lot of different coverages on your auto policy.
Uninsured / Underinsured motorist
Damage from a collision
Damage other that collision
These are all things that you can purchase coverage for on your auto policy. How many of them concern your car? Only the last two.
How many of them have a price next to them on your policy? All of them.
The value of your car isn’t the only thing you’re being charged for on your policy.
That’s because auto insurance covers far more important things than your car, as mentioned above.
You’re not the only one…
It’s also important to understand that you are not the only person your insurance company insures. You are one insured in an large group of other insureds, all who have different characteristics and risk profiles.
Insurance is all about spreading costs over a large number (risk pool) of people, where each person is paying a premium. That risk pool is constantly changing, and is impacted by a variety of different things, including the overall economic climate.
This means that you are sharing in the cost of millions of other people, many of whom may have poor loss history, bad driving record, and/or bad credit. There are many that have good or great characteristics too.
That’s what insurance is though — sharing in the cost.
The next time your auto insurance rates go up, take a look at the big picture. Make sure you’re looking at ALL of the coverage, and corresponding rates. Remember your auto insurance premium is based on much more that the value of your car.
Hope this helps! If you would like to know more about Car Insurance be sure to visit our page dedicated to it.
The information contained in this page is provided for general informational purposes only. The information is not meant as professional or expert advice, and any reliance you place on such information is therefore strictly at your own risk.