Why do my auto insurance rates keep going up even though my car is getting older? At Roark and Sutton, many of our clients ask this question so I would like to address it from a couple of different 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 including:
- Bodily injury
- Property damage
- Un-insured motorist
- Under-insured motorist
- Medical Payments
- Loss of Income
- Funeral Expense
- Loss of use
- Rental Reimbursement
These are all things that are covered on your auto policy. How many of them have to do with your car?
None.
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, with each person paying their fair 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 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 learn more about your auto insurance rates, contact Michael at sutton@roarkandsutton.com or John at john@roarkandsutton.com.