Why Do My Auto Insurance Rates Go Up When My Car Keeps Getting Older?
“Why do my auto insurance rates keep going up even though my car is getting older?” At Thams Agency, many of our clients ask this question, so let’s answer it!
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”.
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 that can be replaced.
What Does your Auto Policy Actually Cover?
If you look at it you’ll notice there are a lot of different coverages on your auto policy:
- 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 you are covered for 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.
Coverage on your policy goes beyond your car. That’s because auto insurance covers far more important things than your car as mentioned above.
The Shared Risk Pool
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, all of 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. The 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.
Recap
Insurance can be complicated, but at Thams Agency we take care of everything for you and are open to answer any questions you may have. If you would like to know more about Auto Insurance, you can contact us at team@thamsagency.com!