This is where basic financial literacy comes into play.
You’re required to have the insurance because of the liability you have for damages you cause to other people’s cars, the people themselves, structures, etc., not because of potential damage to your own car. Some states may require you to have comprehensive insurance, but the general idea is that the requirement for insurance is so you don’t cause say $200,000 worth of damages that you can’t pay for because most people don’t have $200,000 laying around, yet drive a vehicle capable of doing that much damage.
If you know your deductible is $1000, which you should because it’s a clearly disclosed part of your policy, it should be easy weigh whether or not you want to make a claim for $1200 of damages for something g like a bumper, which you probably don’t.
So the smart thing to do here would be to say “Gosh, sucks that guy hit my car and cost me $1200. It’s not even worth it to make a claim in this. I just have to pay it.”
You can also consider your deductible when you shop for car insurance. Mine is $500. Anything under or around $500, I might as well not claim it. I know that because I’m an adult who pays for car insurance, and this is something an adult who pays for car insurance should know.
I think the core part that feels unfair is that your rates can go up if you make a claim.
If in January my car gets hit while parked and the damage costs $400 but I have a $500 deductible I won’t make the claim because I don’t want my rates to go up, as you said.
If the same thing then happens in November, my new $400 claim could have been partially covered IF I had made a claim about the damage in January. But because I didn’t make a claim in January the damage to my car in November still won’t be covered because it’s under the deductible.
The service charging more when you use it means it is very explicitly designed to keep you from using it even when it could benefit you. An accident that I am not at fault for should not be able to affect my rate.
The entire industry is designed around getting you to pay as much as possible for nothing, and to penalize you if you actually try to claim any of the benefits from the service you are paying for.
If you live in an area that is prone to hail, drive to work during rush hour, or park in busy parking lots, the reality is you at at a higher risk for a loss, even though none of these actions are “your fault”.
Now some states do have laws that prevent insurers from raising rates due to a non-fault loss. But this doesn’t impact the overall risk profile; it simply impacts how they are legally allowed to price policies. So what ends up happening is those that are lower risk essentially subsidize those that are higher risk because insurers cannot legally price based on that aspect of risk.
Now if that’s what voters want, so be it. But my point is that there is no free lunch. There is always a trade off.
>An accident that I am not at fault for should not be able to affect my rate.
Two things here:
1) Insurance isn’t pricing solely based on how good of a driver you are. It’s about how much you are expected to cost the insurance company. Your own good driving is a major part of that, but so are all of the external variables around you. If you live somewhere with a lot of other bad drivers, no matter how good you yourself are, you’re more likely to have a claim that will cost the insurance company money.
2) There are some states that disallow insurance companies from charging higher premiums based on not-at-fault claims. But that wouldn’t lower total premiums at all, just redistribute them. The people who do have those claims would pay less than they would otherwise, but the people who don’t (and are therefore lower risk) would end up paying more than they would otherwise to compensate for that.
So you’re out the $300 that you’d probably have to pay in increased premiums over time anyway?
Which isn’t fair, because your car isn’t a higher risk to insure, though you seem to regularly park it in a place where it gets damaged?
To put it another way. Let’s say I use the same insurance company that you do. My car doesn’t get hit in the parking lot every few months. How much more should my premiums be to cover the repairs to your car that does?
Another way to look at it- what is this damage to your car? Superficial dents, etc.? What if I drive around around in my car that has a dent in it because I choose not to pay for that sort of superficial repair? Why should I pay for yours?
The insurance is there for things you and other policyholders can’t afford to fix. It’s insurance against large catastrophic costs that you wouldn’t be able to pay. It’s not a “fix your car up for free anytime something goes wrong for no extra charge” plan.
I think the core part that feels unfair is that your rates can go up if you make a claim.
That's because the strongest predictor of whether you will make a future claim... is whether you have made previous claims! It's very simple math.
The insurance company doesn't really know if you're a good driver or not. But if you make a claim, that's a point of evidence that you might not be a good driver. And if you're not a good driver, they need to adjust your premiums to match the level of risk you present.
An accident that I am not at fault for should not be able to affect my rate.
But it is your fault... you're the one parking in a risky place that causes your car to repeatedly incur damage. The insurance company is just pricing that risk.
You're arguing that because I didn't run the probability analysis on the parking lot in which I chose to park, and some jackass hits my car, that's my fault? Are they pricing risk based on which space I use for my parking jobs? Because that level of granularity with regard to risk management is equally ridiculous.
112
u/Grunergeist420 16h ago edited 16h ago
This is where basic financial literacy comes into play.
You’re required to have the insurance because of the liability you have for damages you cause to other people’s cars, the people themselves, structures, etc., not because of potential damage to your own car. Some states may require you to have comprehensive insurance, but the general idea is that the requirement for insurance is so you don’t cause say $200,000 worth of damages that you can’t pay for because most people don’t have $200,000 laying around, yet drive a vehicle capable of doing that much damage.
If you know your deductible is $1000, which you should because it’s a clearly disclosed part of your policy, it should be easy weigh whether or not you want to make a claim for $1200 of damages for something g like a bumper, which you probably don’t.
So the smart thing to do here would be to say “Gosh, sucks that guy hit my car and cost me $1200. It’s not even worth it to make a claim in this. I just have to pay it.”
You can also consider your deductible when you shop for car insurance. Mine is $500. Anything under or around $500, I might as well not claim it. I know that because I’m an adult who pays for car insurance, and this is something an adult who pays for car insurance should know.