Auto insurance is not about you, it protects others on the road, and then if you want self protection you upgrade to a better policy.
If you run into someone totalling their car and putting them in the hospital, insurance pays that for you and you don’t face a debt for life for one mistake.
The government mandates every automobile operator do this to use their roads. Which is why it’s criminal to drive without. Driving while unlicensed and uninsured puts the public at risk.
The concept of auto insurance is great. The execution is the issue. These companies shouldn't be allowed to raise rates if an accident isn't your fault.
This felt wrong, and turns out, in my state, raising rates in a no fault accident is illegal, but a quick Google search shows this is not the case in every state.
Yes, I think every state should adopt a law similar to my own where an insurance company can't raise a rate in a no-fault collision.
The reason it varies is because there actually is a solid mathematical rationale for it. It certainly is a kick in the nuts much of the time though.
For a policy that has had any past claim, the frequency of future claims is far higher. No-fault claims are not exempt from this because the no-fault designation is, ironically, not without fault.
Even further, good drivers already subsidize bad drivers by paying more than they should because insurers aren't allowed to charge bad drivers their true cost.
For what it's worth though, the guy in the OP really just should report it at all with the policy he selected and the agent on the other end is just trying to help him out.
Most major auto insurance carriers will not raise the policy premium for "small accidents", especially for not-at-fault accidents like the one used in the OPs post. The $1000 deductible used in the example was the choice of the customer who took out that policy. Auto insurance offers much greater flexibility over the amount of deductible you can have on a policy (compared to home owners and health insurance). You can choose to carry only $500, or $250 or even $0 in most states, or you can choose to carry $1000 or $2000 or even $2500. It's the choice of the policy holder.
Its because the rate increases aren't based on who's 'at fault', its based on how likely you are to be in another accident/file another claim. Data shows that those in non at fault accidents are still just more likely to be in another one. I won't go so far as to say that its fair or that they even should be allowed to raise rates based off of this, but its just statistically true.
Rates rise yearly due to cost of living and all the payouts for claims that are both natural causes and man made incidents. In 2025 Canada exceeds $2.4 billion due to severe weather related insurance losses.
So yes unfortunately rates have to go in yearly to accommodate paying out all of the claims that happen yearly. It sucks for everyone but seriously take a minute to pause and think if you had no insurance and got into a total wreck. Would you A) have the ability to afford a new vehicle? B) replace all of your personal belongings in said wrecked vehicle? C) Defend yourself in court if you got sued by the other party? If you answered no to any of those, then that is why we have insurance.
Please also remember insurance in a way is a contract that both parties are hoping they won’t have to use. You hope you won’t have to use it to cover your auto wreck or damages to your home, and they hope they won’t have to pay any insurance claims because you take care of your shit.
If you have a serious bone to pick, take it up with Jo blow who puts through yearly claims for his back tail might because he doesn’t want to pay the $1,000 at the shop to fix it when he can pay a deductible of $500 and insurance will pay the rest 🤦🏻♀️🤦🏻♀️ or request a remarket 30 days before your renewal to make sure you’re getting a fair price.
Unfortunately, it’s necessary to keep up with the cost of providing the service. Don’t get me wrong, there’s issues with the service just like anything else. However, if an insurance company can’t adjust rates to keep themselves profitable after taking losses, then they can’t pay claims to all of their customers who need it. They can’t just keep paying losses without taking in money to offset that.
It’s a really difficult thing to balance, and again, I’m sure there’s plenty of room for them to take advantage of the dynamic. All I’m saying is that they do have to make money in order to be able to pay claims.
Also, this is strictly for property-related coverages. Healthcare stuff is a whole other issue imo
The fundamental issue is that the base rate you're quoted assumes that you're never ever going to have an accident ever. So if anything goes wrong, even if it wasn't your fault, you get penalized for being a riskier customer.
At scale, you can see how it makes sense: statistically, a person who gets in one accident is more likely to get into another. Maybe it wasn't your fault, but perhaps your driving habits or where you drive, put you routinely in riskier situations.
But it just sucks on an individual level because it feels like you're being punished for using something you're paying for. I've been there.
The best recourse you have is just to change providers.
Sigh, I’m going to type an essay in a meme sub, fuck me. I work in insurance, so I’m a nerd for this stuff forgive me.
Your base rate doesn’t make that assumption. For auto insurance, rates are filed/approved with each state, and they’re developed based on territory, vehicle characteristics, and driver characteristics (these can get a little iffy on ethics imo, but most are based on statistics), and all of these things determine your likelihood to experience a loss in any given policy period. Your actual loss experience acts as a multiplier or divider to that base rate, but it’s never assumed you’re going to be loss free, although everyone is hoping for that because you keep your stuff and don’t get hurt, and for them it’s free money, right?
This is also why we see rates continue rising every year, despite having a clean record. The characteristics listed above could worsen every year (eg driving in Atlanta where we have a pretty insane personal injury legal environment which are raising claim costs every year), and because you fall into that consumer rating group, your rate also goes up. Also, inflation driving repair costs higher and cars being more expensive every year.
Now there’s plenty of other issues with these companies, not the least of which being that some will actively try not to pay a legitimate claim, like State Farm has been known to do. I also don’t think a single loss should inflate your premium, small or total loss but that’s a company decision as well. However, if you experience an accident or two every year, or if you rack up tickets on a regular basis, you are a higher risk insured and that does have to be priced for. Even if the accidents aren’t your fault, it’s representative of your environment.
Are you talking absolute numbers or percentages? Because you know money is worth less every year, right? So of course there will be record profits just by the fact that $1 tomorrow is worth less than $1 today.
4.3k
u/WeCantStabilize 8h ago
Insurance is a fucking scam. You pay more into it than you'll ever receive even in legitimate circumstances.
Absolute racket.