Why is auto insurance more expensive than the value of my car?
The reason that auto insurance is more expensive than the value of your car is that auto insurance covers more than vehicle repairs. Auto insurance is more expensive than the value of your car so that it will cover damages or injuries to others. You should still compare auto insurance quotes with our tool below to make sure you are carrying the right amount of coverage at the lowest rates.
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Kalyn Johnson
Insurance Claims Support & Sr. Adjuster
Kalyn grew up in an insurance family with a grandfather, aunt, and uncle leading successful careers as insurance agents. She soon found she has similar interests and followed in their footsteps. After spending about ten years working in the insurance industry as both an appraiser dispatcher and a senior property claims adjuster, she decided to combine her years of insurance experience with another...
Insurance Claims Support & Sr. Adjuster
UPDATED: Jul 8, 2024
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Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Jul 8, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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The following is an exported forum post from our discontinued forum. If you would like to reply to this old forum post, please post a comment below.
My car is only worth $500, but i pay more than $1000 to insure it LOL
why is the insurance for the car so much higher than the car’s actual value? makes no sense
Our Answer
You’re certainly not alone! Plenty of drivers in the United States pay more for car insurance than their vehicle is worth.
It may seem trivial until you understand that auto insurance extends beyond covering your own vehicle repair expenses. It also safeguards against the potential costs of damage you might cause to others’ property and vehicles, such as in Porsche smash repairs. Additionally, conducting an auto insurance price comparison can help you find the best coverage for your needs.
Let’s say you’re driving 60mph down a street while checking your phone. You breeze through a red light and smash into the side of another vehicle. In this situation, it doesn’t matter whether your car is worth $500 or $50,000: the other driver will likely have significant injuries because of your actions. Fortunately, your car insurance is designed to cover situations like that.
Paying around $1,000 annually for car insurance is typical across the United States. While costs can vary—some pay less, and others pay more—this amount generally represents a reasonable yearly expense for most states. your car insurance often exceeds what you pay for your car itself, including Chevrolet car insurance and online car insurance.
However, we recommend checking your car insurance declarations page to verify you only carry liability insurance – not collision and comprehensive insurance. Liability insurance is designed to protect other people and property on the road. It’s legally required. Collision and comprehensive insurance, meanwhile, protects you against damage to your own vehicle.
For a vehicle valued at $500, it’s advisable to exclude collision and comprehensive coverage from your auto insurance. This is because any damage to the vehicle would likely exceed its value, leading the insurer to declare it a total loss. Typically, deductibles start at $500, making it impractical to file a claim for repairs under these coverages. Given these factors, opting out of collision and comprehensive coverage for a $500 vehicle is practical, especially when considering annual auto insurance costs and comparing quotes using an auto insurance quote comparison tool.
Compare Insurance Quotes Online Today to Make Sure You’re Getting a Fair Deal
Paying $1,000 for car insurance doesn’t sound totally unreasonable. You didn’t mention which state you’re in, but that’s about average in many states – even if you’re only getting liability insurance on a vehicle that’s worth $500.
However, it’s also possible that your insurance company is taking advantage of you by charging higher insurance premiums. It’s possible that you haven’t compared car insurance quotes in years, and that other insurance companies in your area would be charging hundreds of dollars less for car insurance.
That’s why it’s important to compare quotes today. Use our own comparison form by entering your ZIP code. Or, visit the websites of insurance companies directly. Input your biographical information and vehicle information, then get a customized quote. If the amount is significantly less than $1,000, then it may be worth making the switch. If the amount is close to $1,000 or higher, then you have verified that you’re getting a good deal.
It’s Not Unusual to Have Insurance Premiums that Are Higher than your Vehicle’s Value
Ultimately, it’s not unusual to have insurance premiums that are higher than your vehicle’s value. You may pay higher insurance premiums than what your vehicle is worth if:
- Your vehicle is older and isn’t worth much money
- You have a horrendous driving record with DUIs, claims, and other incidents
In the first case, your vehicle isn’t worth much, so even average insurance premiums will quickly eclipse the value of your vehicle. In the second case, a risky driver may pay $5,000 or more for car insurance, eclipsing the value of many vehicles.
$1,000 annually appears reasonable for car insurance. Nonetheless, it’s wise to review your policy to confirm you’re solely covered for liability, omitting collision and comprehensive, which are unnecessary for a $500 vehicle. It’s also advisable to compare quotes to ensure you’re receiving a competitive rate for your region, especially if insurance costs exceed your car’s value.
Read more: What are auto insurance premiums?
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Other Answers
Answer 1
You not only insure your car when you buy insurance, you also insure the damage that are you able to cause with it. Let’s say you crash into a brand new Lambo with your 1999 Dodge Neon. Won’t you be glad to have insurance then?
Read more: Affordable Dodge Auto Insurance Quotes
Also… that $1000 you say you are spending. Is that for one year, six months, etc?
And, what is the year/make/model of your vehicle?
Answer 2
The damage caused by your car in any accident can often exceed the value of your vehicle, which is why auto insurance for a year, typical car insurance payment, and Seattle car insurance rates can be expensive.
Frequently Asked Questions
Why is auto insurance more expensive than the value of my car?
Car insurance costs more than car payments because it covers more than just vehicle repairs; it also includes damages to others. This is why Car insurance costs more than your car’s value.
Why is the insurance for my $500 car more than $1000?
Insurance costs more than car payments because it covers potential damages and injuries to others, not just the value of your car. To find affordable auto insurance, consider comparing quotes from multiple providers.
Can I drop collision and comprehensive coverage on a $500 vehicle?
Yes, it’s safe to drop collision and comprehensive coverage when you have a $500 car insurance premium. Be sure to compare insurance costs for different cars to ensure you have the best coverage for your needs.
Why is my insurance premium higher than my vehicle’s value?
Auto insurance premiums account for more than just the value of your car for insurance purposes; they also cover potential damages and injuries, making auto insurance too expensive compared to the car’s value
How can I ensure I’m getting a fair deal on car insurance?
Compare an AAA auto insurance quote, an online auto insurance quote, Tesla car insurance costs, and used car insurance quotes from multiple companies to find the best rates for your coverage needs.
How much does 1 point cost on car insurance?
The cost of one point on car insurance varies widely depending on the insurance company and the state you live in. Generally, it can result in an increase of 20-30% in premiums, but this can vary significantly.
How much does full coverage insurance cost?
The cost of full coverage insurance depends on several factors including your age, driving history, location, and the vehicle you drive. On average, full coverage can range from $1,000 to $2,000 per year.
How much does it cost to insure a new car?
Insuring a new car typically costs more than insuring an older vehicle due to its higher value and potential repair costs. The cost varies widely based on the car’s make and model, your location, and your driving history.
How much is car insurance per year?
The average cost of car insurance per year in the United States is around $1,500. However, individual rates can vary significantly based on factors such as age, driving record, and location.
How much is car insurance in Wisconsin?
Car insurance rates in Wisconsin vary based on factors like age, driving history, and coverage options. On average, residents of Wisconsin pay around $900 to $1,200 per year for car insurance.
Is Mitsubishi Eclipse insurance expensive?
The average cost of auto insurance for a Mitsubishi Eclipse can vary. Generally, Mitsubishi Eclipse insurance costs are considered moderate compared to other vehicles in its class. Mitsubishi Eclipse insurance rates depend on factors such as the driver’s age, location, and driving history.
Why is car insurance so expensive in Colorado?
Car insurance in Colorado can be higher due to factors such as severe weather conditions, high rates of uninsured drivers, and urban congestion, all of which contribute to higher risk and insurance costs.
Why is car insurance so expensive in South Carolina?
South Carolina has higher-than-average insurance rates due to factors like frequent weather-related claims (especially hurricanes), high traffic density in urban areas, and a significant number of uninsured drivers.
Why is car insurance so expensive in Washington?
Washington state has higher insurance costs due to factors such as dense urban areas like Seattle, weather risks (especially rain and occasional snow), and a high rate of auto theft.
How much is insurance on a $50,000 car?
Insurance costs for a $50,000 car can vary widely depending on factors such as the car’s make and model, the driver’s age and driving history, location, and coverage options. Expect premiums to be higher due to the higher value of the vehicle.
How much should you pay for car insurance?
You should pay an amount that reflects your coverage needs, driving habits, and financial situation. It’s recommended to shop around for quotes and compare coverage options to find the best value.
Is car insurance worth it?
Yes, car insurance is valuable because it offers financial protection against unexpected accidents, damage, and liability. Additionally, it is legally mandated in most states. For more information on rates, you can get a free online auto insurance quote. Knowing the average car insurance cost in Nevada can help you understand the auto insurance value you receive.
Do certain cars make car insurance more expensive?
Yes, certain cars, such as high-performance vehicles or luxury cars, tend to have higher insurance premiums due to their higher repair costs, theft rates, and overall risk profile.
Do red cars cost more to insure?
No, the color of your car does not directly affect insurance rates. Insurance premiums are based on factors such as the car’s make and model, age, engine size, and the driver’s profile.
Do you have to declare tinted windows on insurance?
Yes, you typically need to declare modifications like tinted windows to your insurance company. Failure to do so could invalidate your coverage or affect claims.
Does insurance cost less if you own the car?
Not necessarily. While owning a car outright might eliminate the need for certain types of coverage (like collision if it’s an older vehicle), insurance premiums are primarily based on risk factors such as your driving record and location.
Does paying off a car lower insurance?
Paying off your car loan may lower your insurance premiums slightly, as it removes the requirement for comprehensive and collision coverage mandated by lenders. However, other factors still influence your rates.
Does the value of a car affect the insurance premium?
Yes, the value of a car affects insurance premiums. More expensive cars typically cost more to insure due to higher repair costs and replacement value.
Are Volkswagens expensive to insure?
Insurance costs for Volkswagens can vary. Generally, they are not considered excessively expensive to insure compared to some luxury or high-performance vehicles, but rates can depend on the specific model and other individual factors.
Are BMWs expensive to insure?
Yes, BMWs are generally more expensive to insure compared to many other vehicles. This is due to several factors, including the high cost of parts and repairs, the value of the vehicle, and its performance capabilities. Luxury and performance cars typically have higher insurance premiums because they can be more costly to repair and replace.
Are new cars more expensive to insure?
Yes, new cars are often more expensive to insure than older models. This is primarily because new cars have a higher market value, which increases the cost of repairs and replacements in the event of an accident. Additionally, new cars may be equipped with advanced technology and safety features that can be costly to repair.
Are Jeeps more expensive to insure?
Jeeps can be more expensive to insure, but this depends on the specific model and its intended use. For example, Jeep Wranglers, known for off-road capabilities, may have higher insurance premiums due to their use in rugged conditions which increases the likelihood of damage. However, other Jeep models used primarily for regular driving might not be significantly more expensive to insure compared to similar vehicles in their class. Factors such as the driver’s profile, location, and driving history also influence insurance costs.
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Kalyn Johnson
Insurance Claims Support & Sr. Adjuster
Kalyn grew up in an insurance family with a grandfather, aunt, and uncle leading successful careers as insurance agents. She soon found she has similar interests and followed in their footsteps. After spending about ten years working in the insurance industry as both an appraiser dispatcher and a senior property claims adjuster, she decided to combine her years of insurance experience with another...
Insurance Claims Support & Sr. Adjuster
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.