Why do my auto insurance rates keep going up even though my car is getting older? At Ovation Insurance, 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. Here are some of the most common factors that affect your insurance rates:
Other people’s actions that drive up rates for everyone (fraud, uninsured drivers, lawsuits)
Your insurance history – claims, years of prior insurance, credit, discounts received
Your coverage – cost to repair/replace what you insure
Insurance carrier actions – cash reserve requirements to be able to pay claims, cost to properly staff so claim is handled effectively and timely (many small carriers charge lower rates because they know they will avoid paying claims and will not have to staff up for service)
Industries insurance companies depend on to repair/replace what you insure (body shops, parts manufacturers, vehicle prices, medical insurance companies, hospitals, contractors, uninsured drivers, attorney fees, liability payouts, increased wages)
Government regulations and requirements
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.
Loss of Income
Loss of use
These are all things that you are covered for on your auto policy. How many of them have to do with your car?
How many of them have a price next to them on your policy?
All of them.
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.
Let me re-phrase that: your car insurance rate isn’t just based on your car.
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 fish in an ocean of other fish, sharks, and sea creatures, all who have different characteristics and risk profiles.
Insurance is all about spreading costs over a large number (risk pool) of people, which each person paying their fare share. That risk pool is constantly changing, and is impacted by a ton 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 and/or credit.
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.
Hope this helps! If you would like to know more about Car Insurance be sure to visit our page dedicated to it.
Why did my car insurance go up for no reason?
Insurance goes up based on the following: other people's actions (fraud, uninsured drivers), your own insurance history (claims, years of prior insurance, insurance score, discounts), your own coverage, insurance carrier actions (cash reserves required to be able to properly pay your claims), industries working in tandem with insurance carriers increasing their costs (body shops, hospitals, attorneys), and changes to government regulations.
How can I lower my auto insurance rates?
You can adjust your coverage, review your policy with an independent agent to help you find a policy that works for you, improve your credit score, and combine your policies under one company.
Can you negotiate car insurance?
While neither the agent nor the insurance company can negotiate rates with you, they can ensure that you have all eligible discounts applied for and update your coverage to the amounts you're most comfortable with. You can also discuss different pay plans as well, which can further reduce your payments.