Does vehicle insurance ever go down?

[DollarBill]

Does vehicle insurance rates ever go down after you buy a new car? I've never owned a new vehicle and I just wondered if the rates come down after you drive the vehicle say for 5 years? I would think it would but I can't imagine it would drop unless you shopped for new insurance.

[Cherry Lane]

This is something I've never understood about auto insurance.  Whenever I buy a new-to-me car, the insurance rates go up.  This was explained to me as necessary because I now have a more valuable car, so the cost to fix (rather than "total") could be much higher.  That part makes sense.  But as the value of that car decreases over the years, shouldn't the insurance cost decrease?

It never does, except when I've changed insurance providers.

[forummm]

I find that for apples-to-apples comparisons, insurance with the same carrier only goes up each renewal period. If you have liability only coverage, and no claims, that could be due to inflation, increased losses in your area, or the insurer trying to capture excess consumer surplus that could be available through your laziness and inertia (it's a hassle to get competing quotes and switch--and rival insurers may have been more expensive anyway so you don't have a better alternative).

But I also find that for loss coverage, even on depreciating assets like autos, the cost of coverage goes up. It makes no sense from an actuarial standpoint. I can only see it as a way for them to keep extracting more and more profit from you in the manner outlined above. It's very irritating. My insurance rates are going up 21% this year. I had no claims, no tickets, nothing.

[Monkey Uncle]

I find that for apples-to-apples comparisons, insurance with the same carrier only goes up each renewal period. If you have liability only coverage, and no claims, that could be due to inflation, increased losses in your area, or the insurer trying to capture excess consumer surplus that could be available through your laziness and inertia (it's a hassle to get competing quotes and switch--and rival insurers may have been more expensive anyway so you don't have a better alternative).

But I also find that for loss coverage, even on depreciating assets like autos, the cost of coverage goes up. It makes no sense from an actuarial standpoint. I can only see it as a way for them to keep extracting more and more profit from you in the manner outlined above. It's very irritating. My insurance rates are going up 21% this year. I had no claims, no tickets, nothing.

Yes, this has been my experience also.  When I've asked why they keep raising my rates, the answer is always some variation of "because we can."  I've just resigned myself to shopping around every few years.

[Digital Dogma]

Ive found that the greatest control you have over insurance cost after being a good law abiding driver is in raising your deductible. If you know youre OK with driving around with (for example) a dented door/bumper then maybe you begin with a 1k deductible for the first 3 or 4 years. As you feel more and more comfortable with incurring cosmetic damage or repairing minor mechanical damage out of pocket, raising your deductible can significantly lower your annual insurance cost. If youre going to raise your deductible, you should add extra savings to your bank account have on hand to match that deductible in case of a total loss or bad vehicle damage.

Also, if youre forced to get gap coverage and other extras due to terms imposed by your financer, after you pay off the cost of the vehicle this would presumably be eliminated as an ongoing expense.

Good driver discounts and vehicle safety discounts can significantly reduce your bill too, pass a VIN number by your insurer ahead of time to see what % safety bonus they would give you. Different model year and package type vehicles of the same type can have drastically different safety discounts so its not a very intuitive thing.

[mrmoneycleanshaven]

I've actually had steady decreases in my comp and col portions of my policies at every renewal, not as much %wise as the cars have dep'd but steady decreases.

Additionally I have seen decreases when going from an older car, to a new version of the same car due to improved safety features (back up camera nonsense, traction control, more airbags, etc).

Then again I do keep very healthy liability coverage and umbrella insurance as some people think they've hit the lottery if they get in an accident with a doctor no matter who is at fault, so those coverages might influence my rates.

[rocketpj]

Here in BC you get a 1% decrease in your rate for every year you don't have a crash where you are at fault (up to 20%).  Not much until you get up a bit, but it makes at least some kind of sense.

I think they charge more for certain types of cars (i.e. sports cars or big SUV things), but I wouldn't know as I've never owned one.  In Alberta (where insurance works differently) I once chose not to buy one of those little Chevy Sprint cars for the gas mileage because the insurance would have been half the value of the car per year.

[forummm]

My auto rates went down when we got married. Then right back up again. And then up every year since. My home rates have gone up every year too, except I pushed them down last year when I raised the deductible and eliminated some optional coverages. Then this year they went higher than before I'd made all those changes! I can't win.

[Digital Dogma]

Additionally I have seen decreases when going from an older car, to a new version of the same car due to improved safety features (back up camera nonsense, traction control, more airbags, etc).

This isnt always true, I had a 2007 Tacoma v6 4x4 that received a 30% safety discount. I moved to a 2009 Tacoma v6 4x4 which had extra safety features (4 more airbags, traction and stability control, auto limited slip rear differential) and my so called safety discount was only 15%. It goes entirely by the vehicles VIN number which they associate with all sorts of data such as vehicle crash history for specific types (ie turbocharged versions of a popular sedan). It seems like they are attempting to profile drivers based on the collective tendency of certain people to buy certain models of cars (and then smash them).

[Merrie]

If you are married and both on the policy, check what would happen if you flipped your names around. Hubby turned out to have a better "insurance score" than me and listing him first instead of me saved $150/6 months on our car insurance. I suspect this is partly due to claims getting put under me because my name was first (like safety glass replacement which it doesn't make sense to blame on one person). But it also suggests in a few years we could flip the names again if it made sense.

[forummm]

If you are married and both on the policy, check what would happen if you flipped your names around. Hubby turned out to have a better "insurance score" than me and listing him first instead of me saved $150/6 months on our car insurance. I suspect this is partly due to claims getting put under me because my name was first (like safety glass replacement which it doesn't make sense to blame on one person). But it also suggests in a few years we could flip the names again if it made sense.

Did you have 2 cars and 2 drivers?

[cpa cat]

Our rates have gotten smaller as our cars have gotten older. We also experienced a rate decrease when our credit improved (We started with DH with one bad item on his report and Me with Immigrant Credit (short credit history)). One year, the bad item fell off and that same year, I crossed some threshold where the length of my credit history stopped counting against me - our insurance rates halved. BUT - we had to go in and have an insurance review meeting for it to happen.

[Merrie]

If you are married and both on the policy, check what would happen if you flipped your names around. Hubby turned out to have a better "insurance score" than me and listing him first instead of me saved $150/6 months on our car insurance. I suspect this is partly due to claims getting put under me because my name was first (like safety glass replacement which it doesn't make sense to blame on one person). But it also suggests in a few years we could flip the names again if it made sense.

Did you have 2 cars and 2 drivers?

Yes, we did and still do. My name was first and we are both on the policy. In our state they don't classify the car by how far it is driven or assign one driver to each car. I kept calling and asking how we could get the price down and they'd always blow me off, and then out of the blue one call somebody suggested this.

[votu]

My rate went down by a few dollars several times, both with my previous and current insurance companies.

[forummm]

If you are married and both on the policy, check what would happen if you flipped your names around. Hubby turned out to have a better "insurance score" than me and listing him first instead of me saved $150/6 months on our car insurance. I suspect this is partly due to claims getting put under me because my name was first (like safety glass replacement which it doesn't make sense to blame on one person). But it also suggests in a few years we could flip the names again if it made sense.

Did you have 2 cars and 2 drivers?

Yes, we did and still do. My name was first and we are both on the policy. In our state they don't classify the car by how far it is driven or assign one driver to each car. I kept calling and asking how we could get the price down and they'd always blow me off, and then out of the blue one call somebody suggested this.

I just called and they said it didn't matter for me. So YMMV.

We do classify by which person drives which car and how far they drive. So maybe that's why.

[Lis]

The best was when I turned 25 and my insurance dropped a shit ton. Was I any different the day before my 25th birthday? No. But... statistics.

I signed up for new auto insurance right after my 25th and asked how rates changed each year. He explained that I live in a high cost of living area where people love to drive their fancy shmancy cars, and fixing a Mercedes or BMW or Audi is 'more expensive' than the lower end cars (not to mention I don't doubt they get charged out the wazoo because of my area). So the average cost to the insurance agency is higher in my specific area than in others, so if that average goes up, my cost goes up too. Not sure if I understood that correctly, but I suppose it makes sense.

[iris lily]

When we turned age 55 our insurance went down due to that age.

[Chris22]

Not an insurance expert, but my understanding is that generally, the cost of fixing your particular car is a minimal portion of what the company is worried about, and therefore charging you for.  So yes, as your Honda Fit ages and becomes less valuable, the absolute amount of money they will have to pay out to fix it (or total it) grows smaller, but if that's only 10% of the concern, it's not going to change much.  What they are really worried about is the odds you will have an accident and injure someone causing them to pay out to that party which can get $$$$$$$$ really fast.  And your risk pool is based on your car choice, and that risk pool doesn't depreciate the way the car value does.  If people who drive 2010 Honda Fits are statistically more likely to get into accidents in 2015, that's not likely to change in 2016, even if your car depreciated 20% over that same time period.  Thus, your bill does not decline.

[Bob W]

Shop it my friend--- shop it.      Here is a hint --- liability only is cheap and can be 50% cheaper with certain companies.      My $3,000 car liability is around $40 a month.   

[DollarBill]

I plan on shopping for new insurance next time it comes due but in the back on my head I think that I will get a good rate then watch it ratchet up. Then if I ever try to shop around again it would be more expensive because I'm hopping around or if I go back to the original company then I wouldn't be eligible for a long term member rate. Thoughts??

[Frankies Girl]

Shop it my friend--- shop it.      Here is a hint --- liability only is cheap and can be 50% cheaper with certain companies.      My $3,000 car liability is around $40 a month.

I'm paying $45 a month for two cars, one is just under 2 years old with full coverage (other is much older and liability only) and both have auto club/breakdown coverage... and I even have the newer car with full mechanical repair/replace coverage less a small deductible that covers up to 100K/10 years (was so cheap, figured why not?). ;)



And yes, it absolutely should be going down over time as long as you're not having tickets/accidents. You should call them up every year (or even every 6 months if you're bored) and haggle the price. Raise the deductible, ask for a discount for loyalty (and let them know you're shopping around and they need to be competitive) and then price out a few other companies. And then call them back and tell them if you found it cheaper and ask them to at least match. It never hurts to ask.

Definitely ask them for the best price and then shop around... it's worth it.

[forummm]

Shop it my friend--- shop it.      Here is a hint --- liability only is cheap and can be 50% cheaper with certain companies.      My $3,000 car liability is around $40 a month.

I'm paying $45 a month for two cars, one is just under 2 years old with full coverage (other is much older and liability only) and both have auto club/breakdown coverage... and I even have the newer car with full mechanical repair/replace coverage less a small deductible that covers up to 100K/10 years (was so cheap, figured why not?). ;)

Wow, that's a very good rate.

[lackofstache]

Not an insurance expert, but my understanding is that generally, the cost of fixing your particular car is a minimal portion of what the company is worried about, and therefore charging you for.  So yes, as your Honda Fit ages and becomes less valuable, the absolute amount of money they will have to pay out to fix it (or total it) grows smaller, but if that's only 10% of the concern, it's not going to change much.  What they are really worried about is the odds you will have an accident and injure someone causing them to pay out to that party which can get $$$$$$$$ really fast.  And your risk pool is based on your car choice, and that risk pool doesn't depreciate the way the car value does.  If people who drive 2010 Honda Fits are statistically more likely to get into accidents in 2015, that's not likely to change in 2016, even if your car depreciated 20% over that same time period.  Thus, your bill does not decline.

+1

As medical & liability costs increase insurance premiums will increase as well. You get discounts for being a good driver, but you still get lumped in with other drivers who drive similar vehicles. Your vehicle also gets lumped in with similar vehicles, so if your car is stolen frequently in your area, it'll cost more to insure it even if it's cheaper to fix. And older cars aren't always cheaper to fix, btw. A front fender for a 2008 may cost more than one for a 2014 because it's harder to find. It's really only a total loss where older is cheaper than brand new. In all, I wouldn't expect insurance (or much else) to actually get cheaper over time. Shop it if you want it cheaper, insurance companies aren't here to save you money, they're here to make money.

[kpd905]

I'm paying $45 a month for two cars, one is just under 2 years old with full coverage (other is much older and liability only) and both have auto club/breakdown coverage.

What company is this through?

[I'm a red panda]

Without changing companies, my insurance went down $15 this year.  We don't know why.

[Frankies Girl]

I'm paying $45 a month for two cars, one is just under 2 years old with full coverage (other is much older and liability only) and both have auto club/breakdown coverage.

What company is this through?

Geico, but I had to press them during my yearly "hey, my rates need to come down" call (and I do have a loyalty discount in there too). I basically told them I'd been with them for years, but I would be shopping around after I got off the phone with them unless they could show me some decent reductions in costs, and was told they now have a special branch that they call Geico County Mutual Insurance Company. I got passed to a different department, told that they would need to put me on hold about 10 minutes while they ran me through this new branch, and it may not show any improvement... but it dropped my insurance by half with no change in coverages (and frankly, both myself and the rep I was speaking with were shocked; happy, but still shocked at the savings). The only difference was them adding "County Mutual" to the insurance card, and we no longer have accident forgiveness (which we haven't ever used so far and was a low priority for me of things to keep). I can't remember the exact coverages, but it isn't the base level - we have increased property and medical liability coverages.

So yeah, it really, really pays to call your insurance company every year and have that conversation. I saved almost $550/year in about 15 minutes.

[forummm]

Wow. Looks like GEICO bought a smaller company and renamed it. Maybe only available in Texas as far as I can tell.

[Paul der Krake]

It went down significantly after getting married and some shopping around. Better than the individual best deals we each had with a different company.

It's now $54/month for 100/300 for two cars, $1000 deductible on a 2010 (full coverage) and liability only on a 1995 (with a salvage title). Both drivers in their mid-twenties.

[minimalist]

GEICO lowers my rate every year without me asking. Maybe I could get insurance for even less if I called and asked.

[use2betrix]

2.5 years ago I did my first claim in around 5 years. A $2000 claim.

Afterwards Geico upped my insurance on my Jeep nearly $200 a MONTH. It was a joke, I laid to them so hard before I changed. Biggest bullshit I've ever experienced from a company in my life.

Do one claim, and they raise your insurance so much over the next year it more than covers the cost of the damage. Ha. The employees for Geico basically agreed that it was BS, at least as much as they could in their recorded phone calls.

[chippy]

This is something I've never understood about auto insurance.  Whenever I buy a new-to-me car, the insurance rates go up.  This was explained to me as necessary because I now have a more valuable car, so the cost to fix (rather than "total") could be much higher.  That part makes sense.  But as the value of that car decreases over the years, shouldn't the insurance cost decrease?

It never does, except when I've changed insurance providers.

Classic cognitive biases being exploited by your insurance company. Essentially people tend to revert to the default, so the insurance company has calculated that the profit gain outweighs the customer defection rate.  (Plus the customers that leave are probably the smart ones, therefore the least profitable ones...)

Also keep in mind that inflation does mean that you are getting a slight discount... but then we've barely had any inflation recently...