I remember the first time someone asked me this…
“Why does my insurance cost more than my car?”
It was about seven years ago. It was an 18-year-old guy. He bought an old, beat-up, car to get him to and from work. He paid something like 700 bucks for it.
Then he called me for a quote (I was working at another insurance brokerage at that time). No collision coverage. No comprehensive coverage. Just the minimum. His quote… $8000!!!
$8000?!? Yep, his auto insurance cost more than his car… A LOT MORE!
But there’s nothing you can really do about that except call around and find the best possible price you can, given your circumstances (By the way, you can always call me – My number’s at the top of this page).
Now the question is, “How can this even happen? How can car insurance cost so much?”
I’ll give you the answer, although you might not like it.
High risk drivers
Basically, there are some categories of drivers that insurance companies consider “high risk.” These high risk drivers are charged A LOT more than than the “average” driver is charged.
If you fall under that high risk category, the insurance company wants to make sure that they collect enough money to cover future claims by all of the high risk drivers they have on their books.
Now, you’re probably thinking, “$8000 is way more than enough money to cover the costs of fixing a $700 car.” True, but that’s not what’s driving the premium in cases like these. It’s not the actual physical damage that the insurance companies worry about the most – It’s the benefits and liability that would have to be paid out in the event of a catastrophic accident. The costs to the insurance company in a big accident like that could run into the hundreds of thousands, or even millions.
That’s why they charge you so much. The good news, though, is that your rates will gradually decrease the longer you drive without getting into any accidents or getting tickets.
But anyway, call me for a quote. I can shop around to try to get you the best price.