Insurance Rate Changes

Why do my auto insurance rates keep going up even though my car is getting older? At Hertvik Insurance Group, many of our clients ask this question so I would like to address insurance rate changes it from a couple of angles.

First things first, insurance covered more than your car, even though it’s called car/auto insurance. It should technically be called “auto-owners” insurance, similarly to how home insurance is actually called “homeowners insurance”.

It’s important to understand that there are a lot of variables that go into insurance premiums, and with auto insurance, it’s no different.

The insurance company is much more concerned with you crashing into someone and causing them (or yourself) bodily harm, or death, than they are about your car. As a material possession, a car can be replaced.

A human life is not.

When was the last time you looked at your auto insurance policy?
If you look at it you’ll notice there are a lot of different coverages on your auto policy.

Bodily injury
Property damage
Un-insured motorist
Under-insured motorist
Medical Payments
Loss of Income
Funeral Expense
Loss of use
Rental Reimbursement

These are all things that you are covered for on your auto policy. How many of them have to do with your car?


How many of them have a price next to them on your policy?

All of them.

Your car isn’t the only thing you’re being charged for on your policy. That’s because auto insurance covers far more important things than your car as mentioned above.

Let me re-phrase that: your car insurance rate isn’t just based on your car.

You’re not the only one…
It’s also important to understand that you are not the only person your insurance company insures. You are one fish in an ocean of other fish, sharks, and sea creatures, all of who have different characteristics and risk profiles.

Insurance is all about spreading costs over a large number (risk pool) of people, which each person paying their fare share. Therefore, the risk pool is constantly changing and impacted by different things – including the overall economic climate.

This means that you are sharing at the cost of millions of other people, many of whom may have poor loss history and/or credit. That’s what insurance is though — sharing in the cost.

The next time your auto insurance rates go up, take a look at the big picture. Make sure you’re looking at ALL of the coverages, and corresponding rates.

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