5 Responses for "Why do car insurance rates go up?"

1. taylor lautner February 4th, 2010 at 5:02 am 1

   Insurance is a way to transfer a large unknown risk of loss (accidents) to a company in return for a small known loss (your premium or rate). Your rates before the accident were based off of the companies loss experience with people similar to you. After an accident that places you in another category of similar people. Statistically, people with more accidents have a better chance of having more accidents after that.They aren't expecting you to pay more than your car's worth and then have a loss, they are expecting for all of their insureds rates in a year to cover the cost of all of their losses in a year plus operating expenses. That is why it is based off of your statistical chance of loss. Just because you didn't have a loss those years doesn't mean that you didn't have a chance of loss. To simplify it a little bit, you could really say that the money you paid for other years was used to cover losses that other people had that year. Insurance companies are only concerned with your accident history as much as it affects your probability of loss. They aren't going to say that your rates should rise just because they had to give you money or lower your rates because they didn't have to pay you, it is because you have a higher or lower statistical chance of loss that they adjust rates.

2. selena gomez February 4th, 2010 at 5:02 am 2

   Even if the total claim cost $2000, that does not include the cost of sending out an adjuster to look at the car and processing the claim. If this was your first accident and you have good credit you could get a few quotes to see what other companies think – http://www.findlocalinsurance.com

3. justin bieber February 4th, 2010 at 5:02 am 3

   having to pay for an accident cuts into the profit margin. hence now you have to cover the losses with increased premiums.

4. justin bieber February 4th, 2010 at 5:02 am 4

   They go up because the insurance company considers you a bigger risk. Even if you've had a non-injury accident, the insurance company still has to cover the cost.

5. Vanessa Hudgens February 4th, 2010 at 5:02 am 5

   When you have an accident it raises your risk of having more accidents. It is all statistical mumbojumbo and it is also why if you go to any big city some of the tallest and best buildings are insurance buildings.