Why do my auto insurance rates keep going up even though my car is getting older? Many of our clients ask this question so I would like to address it from a couple of 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.
- Bodily injury
- Property damage
- Un-insured motorist
- Under-insured motorist
- Medical payments
- Collision
- Comprehensive
- Rental reimbursement
Which of those are about the car itself?
Only the last three. The rest exist because of what a crash does to people, and which of them sit on your own policy is shown on your declarations page.
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 you are sharing in the cost of many other people, and in California the rating factors an insurer may use are restricted by Proposition 103. Credit history is not one of them here.
That is what insurance is: sharing in the cost.
The next time your auto insurance rates go up, take a look at the big picture. It is worth looking at every coverage on the policy and the rate beside each one.
Hope this helps! If you would like to know more about Car Insurance be sure to visit our page dedicated to it.
A premium can rise for reasons that have nothing to do with your own record, which is worth understanding before deciding whether to move. Start a quote and we will tell you which part of the increase is yours.
Disclaimer
This article is provided by Schneiderman Insurance Agency for general informational purposes only. It is not legal, tax, financial, claims, or coverage advice. We are licensed insurance professionals, not attorneys, accountants, or financial advisors, and nothing here should be relied on as a substitute for advice from a qualified professional in those fields. This content is general in nature and is not a review of, or a recommendation for, any individual reader’s specific insurance needs, policies, or circumstances. Insurance coverage depends entirely on the specific terms, conditions, endorsements, exclusions, limits, underwriting eligibility, carrier, and facts of each situation, and the actual policy language always controls. We do not guarantee any coverage, pricing, eligibility, underwriting approval, or claim outcome. Reading this article does not create an agent-client relationship. To understand how these issues apply to your situation, please review your own policy and speak with a licensed insurance professional, and consult legal, tax, or financial advisors where appropriate.
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