Car insurance premiums should decrease as vehicle value decreases
Posted by hughgwayne@reddit | CrazyIdeas | View on Reddit | 39 comments
If i buy a new car for 50k and insurance is 200 a month, 3 years later the car is only worth 35k but my 200 a month hasn't decreased, in fact, its prob increased. Shouldn't these values decrease proportionally over time?
veryblocky@reddit
Isn’t one of the main points of insurance to cover the damage to other people’s vehicles if you cause an accident?
scumbagstaceysEx@reddit
Almost all of it in fact. If you ditch all the coverage on your own vehicle your bill may only go down like 5-10%
davidspdmstr@reddit
Yep. most of it is for liability.
SylviaPellicore@reddit
They do? If you quote insurance on a 1998 Honda Civic and then a 2026 Civic, you will see a pretty substantial discount on the portion of insurance premiums that covers the car itself, like comprehensive and collision coverage.
If you check your bill, though, you’ll see that most of your insurance covers you. That’s things like liability, medical payments, uninsured/underinsured motorists, towing and labor, rental car coverage, etc. That stays about the same no matter how old the car is.
Also, insurance has just gotten more expensive recently. It’s the combination of inflation, tariffs making car parts more expensive, the war in Iran making oil and oil-derived products more expensive, and climate change increasing the risks of storm damage.
j_johnso@reddit
In addition, older cars tend to be less safe, which leads to higher likelihood of severe accidents, and higher medical bills associated with that.
JJHall_ID@reddit
Older cars can sometimes be more expensive to repair, depending upon the availability of parts. I've seen the collision/comprehensive cost for insurance on a car taper down as it aged, only to start going back up as it got even older.
nikdahl@reddit
Newer cars are the ones more expensive to repair.
Older cars are much, much less expensive to repair unless you are talking about collector vehicles.
smokingcrater@reddit
That rarely applies. If I break a headlight in a 2026 vehicle, it's $6000 to repair with OEM parts. If I break a headlight in my 1985 F150, it probably would total out the vehicle and insurance would pay next to nothing.
(Also, it makes no sense to carry full coverage on an older vehicle with no loan.) Self-insure, and just buy an after market headlight for $50.)
WeissMISFIT@reddit
I work in the industry and see it apply all the time. Basically if it’ll cost 60-80% of the value of the car to repair, they’ll write it off.
Mad_Maddin@reddit
It depends a lot more on value of the car.
If the value is below a certain treshhold they just don't repair and instead pay out the value. Once.
xrelaht@reddit
Mine does. It’s about 60% of what it was when I bought my car.
One-Stranger-6894@reddit
Well, your car costs more to repair today than it would have 2 years ago due to materials and labor costs. Also, that portion if your premium is just a small component. Most of it is liability/medical related, which is also subject to to the higher costs of things. I'd also add that storms are larger and more prevalent than before, so perils like hail, tornado, flood, hurricane, and fire happen statistically more often than they did years ago.
IUsedToLikeLimericks@reddit
Cost to repair hasn't gone down and the cost on average of the car you might hit has gone up.
MortimerDongle@reddit
It does, but liability is usually the majority of insurance cost, and that doesn't depend on vehicle value
14YourTrouble@reddit
It kind of depends what you are paying for. If you are talking about pure replacement of your vehicle, that is true, it would depreciate and thus the insurance should be lower. If you are talking about the liability of running over someone or hitting another car, that probably doesn't decrease. I would guess the bulk of your premium is not for the replacement of your vehicle but the other liabilities.
Goingbychrundle@reddit
Yes I agree and if anything the liabilities increase because there is a higher likelyhood of someone breaking on the older car while on the road causing an accident
Ok-Professional-2979@reddit
I had this same conversation with my state farm agent. I pay more to insure a truck that's now worth 10k, than I did when it was worth 30k....gave me some run around bs. Basically told me I could drop comprehensive and collision or stfu
themanlaar@reddit
Your liability premium covers costs in case you're liable in an accident. A reduction in your own car's value is independent of the damage to another person's vehicle and potential medical costs to make the other party whole.
As for comp or collision coverage, the premium is based on how much it costs to repair your own vehicle. These repair costs go up with inflation even if the value of a vehicle goes down.
themanlaar@reddit
Insurance premiums are based on expected losses. A decrease in value doesn't mean there's an equivalent decrease in expected losses.
YetAnotherInterneter@reddit
Car insurance doesn’t just cover the car. It covers the damage the car could do to other people and property.
A $100 car and a $1 million car are both as capable of causing an equal amount of damage to other people or property.
jhawkd98@reddit
Comprehensive/Collision coverages do often get cheaper as a car ages. Those pay for repair/replacement of your own vehicle. Since your own vehicle is worth less (meaning insurance has to pay you less in the event of a loss), those coverages can get cheaper.
But Comprehensive/Collision is only part of your coverages. The main reason to have insurance is liability coverage. This is what pays others for an accident you're at fault for and is what is state-mandated. That risk doesn't shrink as your own car value goes down as it is irrelevant to the cost of your car. You can still rear-end somebody whether you're driving an old '96 Honda or a brand-new Bronco that you just drove off the lot.
Newer cars tend to have more safety features such as a backup camera or forward collision warning that can make it less likely you'll get into an accident. That means liability premiums are often lower on a newer vehicle. But since that new vehicle is going to cost more to replace in the event of a loss, Comprehensive is likely going to be more expensive. Collision may be more or less, since while the cost is greater in the event of a loss, the safety features will make a loss less likely.
shaggs31@reddit
That is why you should shop around every 6 months.
Scruffy42@reddit
I love when you bring it up and they say "that's not how it works." Usually that's followed up shortly by "Let me see what I an do."
greywar777@reddit
Go get your insurance quoted by a competing insurance agent. Turns out mine could not even quote me anyone but my current insurance company unless I sent him a email saying I was looking at other companies.
For real my insurance went from 400 to 165 a month.
Bigsmalltallall@reddit
Buy beater. Get liability don't worry. Never paid for anything but.
Emotional-Loss-9852@reddit
Comprehensive coverage typically decreases as your car value increases. Liability almost certainly stays the same or goes up. This also doesn’t factor in the amount of claims in your area. For example I live in Texas and there are an obscene amount of uninsured drivers which causes my insurance to go up because my company has to cover if whoever hits me doesn’t have insurance.
theFooMart@reddit
No because the majority off your insurance isn't to cover your car, it's to cover damage to stuff that's not yours. So your insurance rate is based on you, not your vehicle.
For example Someone who hasn't even had a speeding ticket for 40 years driving a $200,000 car is less risk than a 19 year old who's been arrested for street racing, DUI and has three at fault accidents all in less than two years, even if the teenager is driving a $1,000 beater.
RergTheFriendly@reddit
This already happens? Most of the cost is the coverage for if you mess someone else up?
Efficient_Loss_9928@reddit
It does decrease, just try removing the liability part and get a new quote.
The liability part doesn't depreciate, because doesn't matter how old your car is, it is still a killing machine. And in fact probably a more dangerous one
PlayPretend-8675309@reddit
The odds of car trouble go up as a car ages
erisod@reddit
Gotta shop around occasionally to get the costs to go down.
zaahc@reddit
The portion of insurance that insures your car DOES decrease as the car gets older (or at least it can if you shop rates). But the portion that reimburses others for damage that you cause to their cars will forever rise and vehicles become more complex and expensive. This can also be geographically dependent. Ceteris paribus, a driver in Beverly Hills is going to have higher premiums than a driver in Sumter, SC. The former has nicer cars and more expensive things you can (including wealthier, more litigious people).
Nathan-Stubblefield@reddit
Liability? Why would you be less likely to injure people or run into their cars just because your car is old? As for collision protection of your own old low value car, you can drop it.
StarFlyer2021@reddit
Done this. 2 days later, my kid totaled the car.
(Kid was ok - maybe a minor concussion (doctor was very iffy maybe on that), and dust inhalation from the air bags)
Whole family was upset, we had that car before the kids were born, they loved the "retro" hand crank windows, ran well, Honda dependable.
I was just pissed at the timing... like if I had stalled a couple days, replacement would have been (?partly?) covered. Or if I'd cancelled months+ before. But 2 days felt like a conspiracy, or car-ma ...
tads73@reddit
There are 2 general components, liability for everyone around you, collision/comprehensive for your property damage.
Everyone else car is getting more expensive, while your car is getting cheaper. But the cost to fix it is increasing.
minaminonoeru@reddit
The decrease in your vehicle's value has already been factored into your insurance premium calculation.
However, the portion of your auto insurance premium that covers your vehicle's repair costs is not very high. A much larger portion of the premium goes toward compensating the other party if you cause an accident.
Rhyshalcon@reddit
I recently replaced my 20 year old car that I've been driving for a long time with a vehicle that is only a couple years old, and when I did so, my insurance premium actually decreased. It turns out that all those new-fangled safety features are actually good for something.
Even though my new car would be more expensive to fix/replace in the event of an accident, features like blind-spot warning make it significantly less likely to get in an accident in the first place. Driving a cheap car doesn't prevent you from causing hundreds of thousands of dollars in damages in property damage and medical bills that the insurance will then have to pay to fix. But driving a newer car can.
siamonsez@reddit
Of that $200/month probably like $40 is for replacement, the rest is stuff like property damage, medical, and uninsured motorist coverage for you. So if the replacement value drops 30% you wouldn't expect the premium to drop 30%, just the portion of it that is paying for that coverage. By the time your car has depreciated 30% that $12 you'd save is eaten up by other costs rising.
Agitated-Ad2563@reddit
Do you mean the car insurance or the driver responsibility insurance?