Why do car insurance rates go up?
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After an accident, why do car insurance rates goup? What happened to all the money I’ve paid in over the years?
Isn’t that supposed to cover the cost of the accident?
I’m talking about non-injury accidents.
Sorry folks, somehow I posted this twice. Sorry to the other guy I erased.
But, what about all the money I’ve already paid in? That should cover the cost of the accident. My last accident cost ,000 in damage to the other vehicle. I paid in way more than that with my premiums of the years.
5 Comments on this post
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trailerville said:
Insurance is a way to transfer a large unknown risk of loss (accidents) to a company in return for a small known loss (your premium or rate). Your rates before the accident were based off of the companies loss experience with people similar to you. After an accident that places you in another category of similar people. Statistically, people with more accidents have a better chance of having more accidents after that.
They aren’t expecting you to pay more than your car’s worth and then have a loss, they are expecting for all of their insureds rates in a year to cover the cost of all of their losses in a year plus operating expenses. That is why it is based off of your statistical chance of loss. Just because you didn’t have a loss those years doesn’t mean that you didn’t have a chance of loss. To simplify it a little bit, you could really say that the money you paid for other years was used to cover losses that other people had that year.
Insurance companies are only concerned with your accident history as much as it affects your probability of loss. They aren’t going to say that your rates should rise just because they had to give you money or lower your rates because they didn’t have to pay you, it is because you have a higher or lower statistical chance of loss that they adjust rates.
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0December 15th, 2009 at 3:17 pm -
old biker dude said:
having to pay for an accident cuts into the profit margin. hence now you have to cover the losses with increased premiums.
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0 0December 15th, 2009 at 3:17 pm -
BobcatChick said:
They go up because the insurance company considers you a bigger risk. Even if you’ve had a non-injury accident, the insurance company still has to cover the cost.
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0 0December 15th, 2009 at 3:17 pm -
Rich said:
Even if the total claim cost $2000, that does not include the cost of sending out an adjuster to look at the car and processing the claim. If this was your first accident and you have good credit you could get a few quotes to see what other companies think – http://www.findlocalinsurance.com
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0 0December 15th, 2009 at 3:17 pm -
apg2000 said:
When you have an accident it raises your risk of having more accidents. It is all statistical mumbojumbo and it is also why if you go to any big city some of the tallest and best buildings are insurance buildings.
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0 0December 15th, 2009 at 3:17 pm
