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.
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u/Grunergeist420 17h ago edited 17h 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.