# Automobile Insurance



## hyunelan2 (Aug 14, 2007)

Though the dollar value from reselling your vehicle may decline, the cost of repairing it will not become significantly less just because it is now 3 years old. That is what they are insuring, for the most part. Replacement costs and payouts for total loss gets things a little tricky, but for the most part a collision is a repair bill for the insurance company. What it costs to install a new hood, fender, and repaint today is about the same as it will be 5 years from now.


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## oh'mike (Sep 18, 2009)

Dog Gone!!!! That explanation is absolutely logical! ----


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## Giles (Jan 25, 2010)

oh'mike said:


> Dog Gone!!!! That explanation is absolutely logical! ----


I can understand repair costs but what if you were to have a total loss with the vehicle when it is 5 or 6 or even 10 years old? It is certinally going to be a fraction of what it would have been 1 year or less!


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## rusty baker (Feb 13, 2009)

On old vehicles, the deductible can become more than what the vehicle is worth. Then it's time to go to liability only.


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## hyunelan2 (Aug 14, 2007)

Giles said:


> I can understand repair costs but what if you were to have a total loss with the vehicle when it is 5 or 6 or even 10 years old? It is certinally going to be a fraction of what it would have been 1 year or less!


Most insurance companies have a formula they use to calculate damage cost to % of vehicle value to decide if it is a total loss. Let's say, for example, repair cost > 50% of the vehicle value = total loss.

As your car gets older, and the fair market value declines, the likelihood that an accident will cost more than the % of vehicle value they indicate, goes up. So, there is an increased likelihood they are going to total your 7 year old vehicle, even if it has the exact same damage as your brand-new vehicle. They need to insure against that risk of payout.


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## 95025 (Nov 14, 2010)

Giles said:


> Over the years, I have noticed when you purchase collision automobile insurance, the value of the vehicle continues to decline, along with coverage, but the premium stays the same
> 
> 
> 
> ...


I dropped all my State Farm policies last year - auto & home policies. Simply stated, they kept jacking my premiums. I think one of the homeowners' premiums went up almost 40% in 2 years.

Bottom line: There is no insurance company that is in business for YOUR benefit. They're in it to make money, and they will do so in any way they can.


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## 95025 (Nov 14, 2010)

hyunelan2 said:


> Though the dollar value from reselling your vehicle may decline, the cost of repairing it will not become significantly less just because it is now 3 years old. That is what they are insuring, for the most part. Replacement costs and payouts for total loss gets things a little tricky, but for the most part a collision is a repair bill for the insurance company. What it costs to install a new hood, fender, and repaint today is about the same as it will be 5 years from now.


Actually, though what you're saying is true about repair costs, no insurance company is going to pay $5,000 to repair a $1,000 vehicle. They'll just total it out, pay you the book value minus deductible, and take the car.

It can be a REAL screw job!


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## DoctorWho (Jun 21, 2011)

DrHicks said:


> I dropped all my State Farm policies last year - auto & home policies. Simply stated, they kept jacking my premiums. I think one of the homeowners' premiums went up almost 40% in 2 years.
> 
> Bottom line: There is no insurance company that is in business for YOUR benefit. They're in it to make money, and they will do so in any way they can.


Yeah, SF raised my home owner's insurance by 18% for no apparent reason just a month ago. If you call and ask they just say "it's a rate increase" if you ask why it increased they said "well, it's just a rate increase" so in other words, they have no reason other than wanting to ream more $$ out of my ass.


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## rusty baker (Feb 13, 2009)

My in-laws had S.F. on their home for 30 years. They had one claim and got cancelled.


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## spaceman spif (Jul 28, 2009)

I've had Erie Insurance for my home and car for many many moon. A tad bit more than some other insurers, but definitely worth it. One time I totaled a car and they wrote me a check for hundreds _more_ than the car was worth. I've never had problems fighting them for coverage or with them jacking up my premiums. :thumbsup:


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## zircon (Sep 24, 2007)

I have been with USAA for many years and I think they are great. Most articles rating ins co's put them at or near the top. They used to insure only active duty and retired military officers but I believe they have now extended coverage to current and former enlisted too. If you have a DD-214, check them out.


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## teamcampreder (Jul 23, 2011)

Giles said:


> Over the years, I have noticed when you purchase collision automobile insurance, the value of the vehicle continues to decline, along with coverage, but the premium stays the same
> 
> 
> 
> ...


You also have to remember that the cost to insure a vehicle has very little to do with the cost of the vehicle. The vast majority of insurance premiums these days is to cover the liability risk, or the risk of you injuring someone else or damaging their property. You could be driving a rusted out 1985 pickup and still hurt or kill the other driver. The claims are not nearly as common as collision claims, but given the amount that has to be paid if something does happen, it accounts for about 70-80 percent of your insurance premium usually. Our lawsuit happy nation has not helped this.

The insurance company generally earns about 5% profit on the premium, before operational costs. If you pay 1000 per year, about 950 dollars is going towards claims in your area, and the rest goes towards operational costs. They are able to make a lot of money on short term investments with their "reserves", or the amount they have to keep in the bank by law to be available for claims. Thats why so many insurers got hit so bad in this last recession, becuase they had so much money invested.

Also, a lot of companies give you a discount for carrying comprehensive (damage from fire,theft,animals, etc) on a vehicle, which means that your premium is less for liability+comp vs just liability. The theory their is if your willing to pay for some kind of physical damage coverage on the vehicle, your "pride of ownership" in the vehicle will cause you to drive more responsibly.

USAA is hands down the best company in my opinion, but you have to have some military affiliation to get in the door. Some other great "open" companies in addition to Erie would be Amica, if you are in Jersey the NJ Manufacturers, and The Hartford. I personally deal with The Hartford, and love them, they are there when you need them, and pay fairly for claims.


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## Giles (Jan 25, 2010)

*You also have to remember that the cost to insure a vehicle has very little to do with the cost of the vehicle*
What I am considering is that, say---you purchase a new vehicle valed at $30K. It is totaled within a few months and is replaced by your insurance company.
Now, say---you drive the new vehicle for seven years and it is totaled--what do you receive from your insurance company? A fraction of its original value but you are still paying a premium as though it were new!

I would have to disagree with your above quoted text----It certinally cost me more to insure a $75K BMW then then it did to insure a $13K Toyota!!


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## teamcampreder (Jul 23, 2011)

Giles said:


> *You also have to remember that the cost to insure a vehicle has very little to do with the cost of the vehicle*
> What I am considering is that, say---you purchase a new vehicle valed at $30K. It is totaled within a few months and is replaced by your insurance company.
> Now, say---you drive the new vehicle for seven years and it is totaled--what do you receive from your insurance company? A fraction of its original value but you are still paying a premium as though it were new!
> 
> I would have to disagree with your above quoted text----It certinally cost me more to insure a $75K BMW then then it did to insure a $13K Toyota!!


Take a look at your insurance policy and see how much the collision is costing individually. You will see what I mean.

I am also willing to bet it didn't cost you 6 times as much to insure the bmw than the toyota, if all the other risk factors were the same. (13x6=78)


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