Thursday, May 3, 2012

Car Insurance, Why Doesn't It Decrease?

Now that my husband is retiring in a month, early retirement, we are looking into getting some more life insurance. I figure if he is going to spend a lot more time home and only work part-time, there is a good chance I’ll kill him, so I should insure him for that eventuality. Just kidding. I think he will keep busy with a new job or two and his hobbies, and stay out of my hair.

While I was on the phone with our insurance agent about the extra life insurance we will need, I decided to ask a question that has been burning a hole in my brain for years. I may have even blogged about it before. I wanted to know why is it that when you buy a car, your insurance is a set price and remains at that price even while the car depreciates every year and it’s blue book value goes steadily down. So, I asked why doesn’t the car insurance go down along with the value of the car. The answer was so simple I had to laugh at myself. The agent explained that while the value of the car does go down, the price for parts and mechanic labor costs to fix it, do not. The insurance is based on what it would cost to “fix” the car if it’s in an accident and not totaled. A new car that needs a new bumper, for example,  will cost the same to fix as a five year old car that needs the same bumper! Now that makes perfect sense. I really should have gotten to the bottom of this issue sooner. I can’t tell you the number of times I have ranted and raved about the cost of car insurance and feeling like we were getting ripped off.

Mystery solved…and to my satisfaction! Now I just have to think about the life insurance and how much do we really need.  Happy days.


  1. wow, you're kind of simple aren't you?
    old car parts cost LESS than new car parts.
    your insurance agent lied to you (that's what they're trained to do - under ALL circumstances) and you believed him.
    it's a good thing that you...
    never mind.
    i'm just glad i'm a guy.

  2. Hey, Nina! I'm glad that you were satisfied with your agent's answer with regards to your question about insurance. There's actually a way to lower your insurance premium: skip on other coverage/policies of the insurance you're subscribed into. But like any other policy, there are cons to this, so you have to choose wisely.

    Fe Penley

  3. Duh... if you buy an older/cheaper car, your insurance is cheaper. If your car is cheaper than when you first signed up, then insurance should be cheaper... Just get a new quote from a different company and make your current provider match it... if they won't, then switch companies.