Why isn’t my premium dropping each year as my vehicle gets older?
That is a question I have been asked many times. It is a fair question that is fairly easy to answer.
The next time you receive your auto declarations page in the mail, take a look at the various coverage listed.
You certainly see Collision & Comprehensive. Those make a good portion of your premium too. But when it comes to items on your policy that have much to do with your “aging” vehicle, that is about it.
It’s the other stuff
Many insured’s simply think about a Total Loss when asking why their premiums are not going down as the age of their vehicle goes up. Sure, your insurance company may give you less each year for that vehicle if it is totalled in an accident or stolen and not recovered.
But what about your vehicle if it is NOT totalled in a accident or what happens if your vehicle IS recovered after a theft?
What most consumers may not realize is this – the cost to repair that older vehicle is not going down. Are automotive parts getting less expensive just because your vehicle is a couple of years older? Do Labor costs to fix your vehicle get less expensive each year or more expensive?
Hopefully, we all can agree on the answers to those two questions.
When you are at-fault
What about when you are at-fault in an accident? The bodily injury portion of your policy pays for injuries in the “other” vehicle, not yours. And when you hit someone else, your property damage coverage will fix the “other” vehicle.
What about when an uninsured or underinsured driver hits you? Those two items have nothing to do with your vehicle.
Then you can look at glass coverage, road service, car rental, and even medical coverage. Those have zero to do with a total loss of your vehicle.
Just keep in mind that you and your aging vehicle are covered for more than just a total loss. Many claims are “partial” claims, which require repair to fix. That means your policy will pay for the parts and labor, not a cheap proposition anymore (minus deductibles, of course)
My auto policy protects my assets too?
Plus, your auto policy is actually protecting your assets & income if you hit someone else. You may not realize it but Bodily Injury and Property Damage help protect you from being personally liable for the damaged YOU cause to others. If you have ever been at-fault in an accident you likely are grateful your policy was there to handle the claim.
Talk to your agent. Go over your policy in detail. The more you understand, the better for everyone.
If you live in Arizona, visit my site for an auto quote:
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