

Ask HN: Why doesn't car insurance price decrease as car depreciates? - source99

When I get insurance on my new car the price is $N&#x2F;Month.  After several years the price stays the same but the amount I would be reimbursed in a scenario where my car is totaled goes down.  Seems my monthly premium should go down as well....
======
codegeek
Because insurance companies (or any profit making company for that matter) do
not like to decrease premiums in some kind of automated fashion. They want you
to work hard to get that reduction even if there is one possible.

Now, about your car being new vs old, that part is usually covered by
"Comprehensive" insurance. It applies only to your car. If you think your car
is too old and of not much value, don't buy comprehensive. It is optional
unless you have leased/financed the car. If you own the car outright, then you
can get rid of comprehensive if you still have it on your policy. Note: I
don't know if all states have same laws but generally, this is the case.

The part of insurance where you usually don't want to cut corners is the
liability insurance. That is, what happens if someone else's car or
life/health is damaged by you.

------
gregcohn
How about a little OP love for a great question. All the responses saying
liability is a large part of insurance cost are correct, but comprehensive is
a non-zero part and your cap in terms of reimbursement does in fact go down
over time.

There's possibly also a correlation between new cars and accidents (for the
same reason sports cars cost more), though this may be somewhat offset by the
probability that injuries probably go down as a function of recency of safety
technology.

TL;DR - there are a lot of factors in costing insurance, but at least one of
them should go down in direct proportion to time.

------
Beached
Because the amount of damage they can cause (Property and Life) does not
decrease as the value decreases.

------
dangrossman
The catastrophic situation you are insuring against isn't repairing your car,
it's your liability for the property and people you hurt in an accident.
Unless you're with one of those state minimum insurers, you're probably
insured to pay out somewhere between $100,000 and $500,000 to whoever you
injured. You wouldn't expect the $N per month for this coverage to change
_that_ much whether your maximum payout is $510,000 or $505,000. All the other
things that went into deciding your premium (location, accident history, etc)
don't automatically change year over year.

------
thejteam
In addition to the comments about liability coverage, also remember that in
most accidents your car will not be totaled. The cost of repairs only goes up
over time.

------
kyllo
If you call your insurance company and _ask_ for a premium reduction they just
might give it to you. They are not going to simply volunteer to reduce your
premium though.

------
cratermoon
If you carry more than liability past a certain time, you could drop it. Then
you don't get coverage if the accident is your fault, but your cost may go
down quite a bit.

------
guiye
and sometimes it increases!

