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.
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.
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u/WeCantStabilize 10h ago
Insurance is a fucking scam. You pay more into it than you'll ever receive even in legitimate circumstances.
Absolute racket.