Dumb questions about car insurance

December 27, 2007 4:43 PM

I've got a few questions about car insurance

I have owned my car for about three years entirely on my own. My insurance premium (IMO) is quite high. In the past 3 years, I have paid my insurance company about half of what my car is worth and I am yet to make a single claim. I currently don't have a good driver discount (last speeding ticket was in 2005 and it won't come off till June 08) and my rates can't go lower (because I live in a really safe town with no crime and it can't get any less crime free).

My questions:

a) The insurance company is insuring my car for what it's worth, right? If so, my car has devalued quite a bit since I've had it. So technically, it would cost them a fraction of what I originally paid to replace the car (if I were to total it). Then doesn't it seem logical that they charge me less over time?

b) Is there a objective website that will give me some idea of what I should be expect to pay (ballpark) for a make and location?

I just don't have any frame of reference.

posted by special-k to travel & transportation (11 answers total)

(a) Probably not. It's likely that a large chunk of your premium is to insure you against liability for injury to other people and their property, and another portion is to insure you against your own personal bodily injury -- both unrelated to the value of your car. Only that portion of your premium which is paying for casualty and collision could decline in cost related to the depreciation of your car.

(b) No. Every insurer has different underwriting standards, and applies them differently to different people and places. The only way you can find out in reality is if you can get a lower rate from other credible, well-rated insurers. (A lower quote from an insurer with significantly less financial strength or worse service to people with claims tells you only that you can pay less to get less.)
posted by MattD at 4:59 PM on December 27, 2007

First, get your complete bill. You actually have several different types of coverage (because they like to make it complicated) (Florida excepted, they have a no-fault law making it all a lot simpler).

You have liability, which covers everyone else for what you might do with your car. Liability tends to be higher for certain cars (like sporty models) but sometimes can be quite high even with a normal seeming car if a particular model is known to *ahem* suck at accident avoidance (eg, worse than average breaks or steering).

You have comprehensive, which covers things that you'd hope insurance would cover but isn't listed as a specific line item (things like the theft of your car, miscellaneous medical expenses incurred by you or your passengers not covered by liability)

Finally, you have collision, which covers buying you an equivalent car, or repairing your car. Since repairs rarely run over $10,000 and often are less than $2000, the insurance company is really planning on repairing your car, not replacing it.

These days you can get range of price quotes from esurance or progressive which will include what you'd likely pay with various standard companies like State Farm or AllState.

Getting older often helps with rates. And your insurance company won't always tell you about good discounts. (For instance, have a garage? Many insurance companies have a discount due to the decreased risk of theft.) You can call your company and say that you're unhappy and thinking about switching to get a list of available discounts that you might qualify for.
posted by TeatimeGrommit at 4:59 PM on December 27, 2007

The insurance company is covering your liability in an accident. Driving is inherently dangerous (you're moving 2 tons of steel down a strip of asphalt barely wider than the vehicle at speeds in excess of 55 MPH, controlled by the friction generated by about 12 square inches of rubber, with 17 year olds driving their hunks of steel right next to you in the opposite direction), and they need to pay for your car, your medical bills, and the funeral of the 80 year old lady you ran over.

Sure, you are an above average driver- but half the folks out there aren't. Insurance exists to pool the risks and liabilities across a wide range of people.

Try eSurance and geico's website- it's possible you can do better. Many states are regulated, and the cost won't reduce even with your good driving record.
posted by jenkinsEar at 4:59 PM on December 27, 2007

What you can do about your rates depends on which of the types of coverage you have is excessive. Liability? They think you personally are a bad driver or that your car isn't very safe. You can test this by asking what just liability would cost if you bought an expensive (yes, pricey, lots of dough) station wagon or minivan. Why expensive? To remove the ability of the car to avoid accidents from the company's consideration of your liability (you're not really going to buy an expensive car, but it's handy to know that sometimes a better car is cheaper overall).

Comprehensive? Get a different company or move to a new, safer address. Really, not a lot to be done here, since it's kind of a catch-all for miscellaneous expenses.

Collision? This one is purely a function of your type of car. Cars that are cheaper to repair get lower rates. Cars that are easy to replace (less than any typical repair bill) get the lowest rates.
posted by TeatimeGrommit at 5:10 PM on December 27, 2007

Thanks Matt, TeattimeGromit and jenkinsEar. I forgot the liability part.
posted by special-k at 5:11 PM on December 27, 2007

FWIW, I drive an uncool car and for the most part, like an old man (the speeding ticket was just bad timing)
posted by special-k at 5:12 PM on December 27, 2007

Some of it isn't even your insurance company's fault. In my state they required every policy to have coverage for uninsured motorists so you would be covered if some jerk without insurance hit you. The legislature recently overturned that requirement and my new policy was less than half of what it was--that is how much that mandatory coverage was costing. Your state might have similar requirements that are driving up your rates and have nothing to do with your individual driving habits or zip code.
posted by 45moore45 at 5:46 PM on December 27, 2007

I'm not sure what your insurance company does, but here in BC ICBC does charge less for collision and comprehensive insurance when your car gets older (and hence less valuable). The liability part, as others have said, doesn't get reduced.
posted by ssg at 5:50 PM on December 27, 2007

One thing I've seen companies do is "forget" to lower your rates when they can. To double check this you can call in to their sales line and get a price quote (make up a name, if it's GEICO, make up a SSN) for your car, age, etc. Tell them you don't want to have them run your credit for a quote, but offer to give them your score.

If they quote you a price significantly lower, call back into the service line and ask them to adjust your rates without adjusting the coverage until it matches.

Rates for comp and collision should go down as the car value goes down.

If all else fails, switch to another company. My rates when down 30% by switching to another company of equal quality (I researched their payout rates and such before switching).
posted by krisak at 5:58 PM on December 27, 2007

What are your deductibles? I always ask for as high deduct as possible and currently have $2,000 deduct for comprehensive and collision. In consequence my premiums for a five year old saab are less than $700/year (yes, I have never had an accident, live in the burbs, and I'm in a good age bracket for this purpose). Of course, you must be prepared to pay the deduct if bad luck strikes. And if your bank still has title, they may proscribe a high deductible policy.
posted by Kevin S at 7:51 PM on December 27, 2007

You may be interested in this write-up of what your coverages mean, which I used to respond to a Yahoo! Answers question. It explains liability vs. comp/collision, "full coverage," and how you can lower your premiums.
posted by PandemicSoul at 10:45 AM on December 28, 2007