Come on, Man! Why do my Oklahoma car insurance rates keep going up?

Why do my car insurance rates keep going up, even though my car is getting older and I haven’t had any claims or tickets?!

If you have ever asked this question, you’re not alone. This is one of the top five most common questions we get at our agency.

After all, everyone knows a car will lose value as it gets older. It’s only logical that your insurance company isn’t going to pay you as much if your car is totaled now, compared to when it was new, RIGHT?

This is usually a question people ask out of frustration with (another) car insurance rate increase. They haven’t filed a claim. They haven’t had a speeding ticket. They feel like they are being punished along with all the “bad drivers.”

What do you do when faced with this frustration? The solution many people choose is to just switch insurance companies to one that is less expensive.

But, let me save you the suspense… that company is going to increase your premium over time too.

 

 

If you want to know the answer to this age-old question…
Please, read on.

First things first though, It’s important to understand there are a lot of variables that go into determining auto insurance premiums. The value of the car is only one of them.

The question is asked out of emotional frustration. It has to be answered and understood logically, though.

What does your car insurance cover anyway?

Even though it’s called car insurance, it covers more than just your car. It should technically be called “car-owners” insurance. The car insurance covers the actions of the driver.

The primary coverage on car insurance (liability) doesn’t protect your car anyway. It pays for injuries you cause to someone else or damage to the car or property of someone else. Car insurance is there to help you, the car owner, pay for the damage you may cause.

I think most of us understand insurance is not an investment or savings account. If we don’t file a claim we don’t get our money back.

Your insurance doesn’t cover what you “haven’t done” but rather what you might do. An insurance policy pays for things that may happen in the future, where everything is more expensive than it was in the past.

When is the last time you really looked at your auto insurance policy and not just the bill?

If you look at your auto insurance policy you’ll notice there are a lot of different coverages listed.

car-insurance-rates-keep-going-up

An Auto Insurance policy has 3 Basic Parts

Part 1.  Coverage for people you hurt and stuff you smash-up.
  • Bodily Injury – Liability
    • This coverage is NOT OPTIONAL. The state requires a car to carry this coverage.
    • This is the promise your insurance company has made to pay for injuries you cause to someone in an accident you cause. At the very minimum this promise is for up to $25,000 per person and up to $50,000 per accident.
  • Property damage – Liability
    • This coverage is NOT OPTIONAL. The state requires a car to carry this coverage.
    • This is the promise your insurance company has made to pay for the property damage in an accident you cause. At the very minimum this promise is for up to $25,000 per accident
Part 2. Coverage for YOU in a car accident.
  • Uninsured / Underinsured motorist
    • First of all, this coverage is OPTIONAL.
    • Second, this DOES NOT COVER YOUR CAR (See Collision coverage below).
    • This is coverage for you or your passenger’s bodily injuries in an accident where the at-fault driver didn’t have insurance, or just didn’t have enough.
  • Medical Payments
    • This coverage is OPTIONAL.
    • This coverage can be used to pay for the medical costs of injuries from a car wreck you are in. (You can use this coverage no matter who is at-fault in the wreck.)
Part 3.  Coverage for your car if it is damaged.
  • Damage to your car from a collision
    • This coverage is OPTIONAL.
    • This is listed as your “Collision Deductible”.
    • If you are at-fault in a wreck and smash your car up in the process, this coverage is the promise your insurance company has made to pay to repair your vehicle, or buy it from you if it is a “total-loss.”
    • **This coverage also means the insurance company will pay to repair or buy your car if an UNINSURED DRIVER caused the damage to your car.
  • Damage from something other than a collision
    • This coverage is OPTIONAL.
    • This is listed as your “Comprehensive Deductible”.
    • If your vehicle is damaged because of something other than a collision, this coverage will come into play.
    • Examples: Hail storm, theft, vandalism, hitting a deer in the road, etc.
    • This is the promise your company has made to pay to repair your car or buy it from you if it is a total loss.
  • Roadside assistance
    • This coverage is OPTIONAL.
    • This will pay for reasonable costs to help in roadside emergencies.
    • Examples: towing, lock-out, running out of gas.
  • Rental Reimbursement
    • This coverage is OPTIONAL.
    • This will “help” pay for a rental car ONLY in the event of an accident where your car is in for repairs AND you have collision/comprehensive coverage.

These are coverages you can purchase on your auto insurance policy. But, how many of them concern your car?

Only the coverage described in Part 3.

How many of them have a price next to them on your policy? All of them.

So obviously, 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 just your car, as mentioned above.

SO, WHY DO MY CAR INSURANCE RATES GO UP, THEN?

You’ve been patiently waiting for the answer to this, so here it is…

While the value of a car decreases over time, the cost to repair it does not. 

A 5 year-old car isn’t worth as much as a brand-new car, but it’s no less expensive to repair. And here is why the cost to repair a car matters more than what that car is worth – MOST CAR WRECKS DO NOT TOTAL THE CARS INVOLVED.

  • Insurance companies spend much more on car repairs than they spend on buying totaled cars. It’s not just your car that can be damaged in a wreck. Repairing a car tends to cost more over time due to increases in the cost of parts and labor.
  • People get hurt in car wrecks too, obviously. The cost of medical care seems to increase year after year. Just because a person is hurt in a car wreck doesn’t mean the medical bills are cheaper.

You’re not the only person your insurance company looks at when determining what to charge its customers…

  • It’s important to understand you are not the only person your insurance company insures. You are one insured in a large group of other insureds, all of whom have different characteristics and risk profiles.

Some of them are like you; excellent drivers who never get distracted or have any claims. Others may be just average drivers. Still others are either bad drivers or extremely unlucky.

Excellent drivers, like you, are paying less than the others, I assure you. But that doesn’t mean that your premium will go down when your policy renews.

Insurance is all about spreading the future costs of claims over a large number (risk pool) of people, where each person is paying a premium. 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, like you.

That’s what insurance is though — a group of people sharing in the cost of things that may happen IN THE FUTURE where everything usually costs more than it did in the past.

What should you do when your rates change?

The next time your auto insurance rates go up, I’m not saying you should feel all warm-and-fuzzy, but 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 than the value of your car.

A review of your entire insurance plan is a valuable exercise for you to do at least every couple of years or when your life changes (e.g. marriage, kids driving, divorce, etc.).

No one likes to pay for insurance, but I’ve never had a client ask me about their rates when they are filing a claim. That’s why a review of your insurance plan is so important. Feeling good about the price of your insurance can nose-dive quickly in a claim where you don’t have the coverage you need or expect.

There is NO ONE COMPANY THAT IS THE BEST AND CHEAPEST FOR EVERYONE.

That’s why there are dozens of auto insurance companies a person can choose from.  Most people understand that you get what you pay for, or else you will pay for what you get.

Most people like to look at reviews during the shopping phase of a purchase. Review.com rated the “best auto insurance companies in Oklahoma for 2018.”

Does that mean you should over-pay for car insurance? ABSOLUTELY NOT. But there is a difference between being sold insurance and being given advice about how to protect your assets and income.

We do the latter. Our office can promise to help anyone with their insurance plan, even if they end up buying it somewhere else. Because we’ll help you understand what coverage you need and the most efficient way to build your insurance plan.

By the way, we still beat the price of our competitors on a regular basis. Let us help you!

Call our office at 405-340-0606, or complete our brief form and we’ll get started on you insurance proposal right now!

 

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Are you ready to save time, aggravation, and money? The team at Allen Drew Insurance Agency is here and ready to make the process as painless as possible. We look forward to meeting you!

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