Aug 12

If my car is getting older, why don’t my rates go down?


ChartOne of the most common questions we receive in regards to Auto Insurance is:

If the value of my car is going down, why don’t my rates go down?

First, this is a great question, as it seems logical that rates should mirror the value of the car. However, the fact is that rates don’t necessarily follow the vehicle’s value, and there are two main reasons for this:


  • The majority of the costs associated with insurance actually have nothing to do with the direct cost of fixing your car. That may seems surprising initially, but in reality, the majority of the dollars paid for auto insurance claims have to do with medical costs and litigation expenses. As you may be aware, the costs of these two areas continue to rise (dramatically in many instances), which is why insurance costs have had a difficult time going lower. Throw in the fraud that has been increasing throughout Florida, and you have a major challenge in managing the claim costs of insurance.
  • Another primary reason that insurance costs for your car don’t decrease with the value is that the most common claim that occurs to fix a car is not from a total loss (a total loss is when the damage exceeds the value of the car). Therefore, because most damaged vehicles will be fixed (rather than salvaged), those costs (materials and labor) will move in the direction of materials and labor (these generally move higher as well, of course).


For any of those “nagging” questions you have about insurance, please feel free to drop us a line, and we’ll do our best to answer, or we’ll find out the answer with you.