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Car Insurance Question
Posted on 5/16/14 at 10:33 am
Posted on 5/16/14 at 10:33 am
I've had this question running around in my head for a while and I've never been able to get a straight answer. Let's say I buy a new vehicle and pay $400 every six months for full coverage insurance. I continue to pay that amount over the years, even though the value of the vehicle is depreciating. I finally get the vehicle paid off, yet I still pay the same $400 every six months.
Why don't my premiums go down over time? Is the depreciation "built in" to the premiums? I find that hard to believe. I'm sure there's an answer other than, "We're suckers and we pay it." At least I hope so.
Why don't my premiums go down over time? Is the depreciation "built in" to the premiums? I find that hard to believe. I'm sure there's an answer other than, "We're suckers and we pay it." At least I hope so.
6
Posted on 5/16/14 at 11:01 am to Python
most of that premium is for liability insurance. The damage you cause to others. that can't "depreciate".
Your comprehensive and collision, if you carry that, will go down with the vehicle value.
I mean, a 2014 truck worth 40k is going to have a higher rate than a 1999 Truck worth 2K.
ETA: once the vehicle value gets low enough I would remove the comp and collision and "self insure". You are only required to carry liability by law.
Your comprehensive and collision, if you carry that, will go down with the vehicle value.
I mean, a 2014 truck worth 40k is going to have a higher rate than a 1999 Truck worth 2K.
ETA: once the vehicle value gets low enough I would remove the comp and collision and "self insure". You are only required to carry liability by law.
This post was edited on 5/16/14 at 11:04 am
Posted on 5/16/14 at 11:04 am to Mr.Perfect
It never has. Maybe I should have a talk with my agent
Posted on 5/16/14 at 11:12 am to Python
quote:
It never has. Maybe I should have a talk with my agent
I would. There should be a premium breakdown on your quote. Take a look at the comp and collision numbers and see what risk tolerance you have.
Like I said, the liability and property damage to other is what it is. Obviously the higher the limit the higher the rate.
But the other side should be inverse to the potential payout like that 40K vs 2k example. And then look at your deductible to insured value. If you have a vehicle worth 5k replacement cost and you have a 1k deductible you are already retaining 20% of the risk.
best of luck
Posted on 5/16/14 at 1:07 pm to Python
There are two other things I would look at:
1) Are the limits on your liability increasing over time?
2) Has the risk of you incuring a claim increased over time? Accidents, tickets, or just being rated in a bad group? Liability premiums will increase if the insurance company things the risk is increasing.
1) Are the limits on your liability increasing over time?
2) Has the risk of you incuring a claim increased over time? Accidents, tickets, or just being rated in a bad group? Liability premiums will increase if the insurance company things the risk is increasing.
Posted on 5/17/14 at 7:35 am to Mr.Perfect
quote:
Your comprehensive and collision, if you carry that, will go down with the vehicle value.
This is not necessarily true. The price of labor and materials to repair a vehicle don't get cheaper.
Posted on 5/17/14 at 7:42 am to Shadowlink
quote:
This is not necessarily true. The price of labor and materials to repair a vehicle don't get cheaper.
This. most insurance claims for property are a bumper, fender, and some paint.
The cost for that only goes up.
In georgia, most people don't see an increase in the comp/collision premiums. the depreciating value is offset by typical cost per claim increases.
Posted on 5/18/14 at 9:19 pm to Python
simple get quotes from other places. never stick with one company forever. i will always call around to find the best deal. and so far its usagencies.
Posted on 5/18/14 at 11:03 pm to Python
Posted on 5/19/14 at 10:41 am to Odinson
This thread wasn't about high car insurance rates. It was about rates that never go down over time, even though the value of the vehicle does.
Posted on 5/19/14 at 11:17 am to Shadowlink
quote:
This is not necessarily true. The price of labor and materials to repair a vehicle don't get cheaper.
the labor would be the same sure.
But the rate on comp and collision absolutely would be lower on an older vehicle. it is a pure numbers game.
comp and collision on a 40k vehicle means the cost of a total would be 40k minus the deductible. on a 5k vehicle there is less on the line from the carrier perspective, thus lower rates on the coverage.
Posted on 5/19/14 at 12:00 pm to Mr.Perfect
quote:
comp and collision on a 40k vehicle means the cost of a total would be 40k minus the deductible. on a 5k vehicle there is less on the line from the carrier perspective, thus lower rates on the coverage.
I totally understand what you're saying. But after a certain age, the comp and collision will not come down. There is a reason people drop the comp and collision coverage after a while because the insurance companies don't make it worthwhile anymore.
Posted on 5/19/14 at 1:21 pm to Python
Your rates should be going down over time. mine have and every policy ive seen does. How old are you?
Posted on 5/19/14 at 2:08 pm to Python
The majority of your premiums have nothing to do with physical damage coverage to your vehicle. Comprehensive and Collision are the only ones tied to the value of your vehicle. Your liability will likely increase at a faster pace than your physical damage will decrease.
You also have to consider that cost of repairs increase each year as parts and labor increase.
You also have to consider that cost of repairs increase each year as parts and labor increase.
Posted on 5/19/14 at 2:25 pm to Shadowlink
quote:
There is a reason people drop the comp and collision coverage after a while because the insurance companies don't make it worthwhile anymore.
I agree there too. At some point you should self insure
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