Why does my auto insurance rate keep going up even though my car is getting older? At Millennium Brokers, we’ve heard this question a few times. Let’s Dive into this topic.
Even though it’s called car or auto insurance, these polices cover more than just your car. These polices 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.
Do you remember the last time you looked at your auto insurance policy?
If you look at it you’ll notice there are a lot of different coverage on an auto policy.
Loss of Income
Loss of use
These are all things that you might be 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.
That’s because auto insurance covers far more important things than your car as mentioned above.
It’s important to remember that car insurance rate isn’t just based on your car.
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. Risk pool are constantly changing, and are 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 coverages, 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.