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Why doesn’t the cost of insurance decrease with the value of my vehicle?
Does car insurance go down as the car gets older? I’ve had my car for 10 years and I’ve noticed my insurance premium is higher than what I used to pay. Shouldn’t the price be proportionate to the replacement cost of the car?
Shannon Martin · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“This is a common misconception, but the cost of car insurance does not necessarily decrease with the value of the vehicle.
While the vehicle’s value is a factor in determining your insurance premium, it is just one factor among many and is generally weighted less than other factors such as your driving history and insurance history.
Even though
collision coverage
and comprehensive coverage
pay for damages to your vehicle up to the actual cash value of the car
—which, as you note, decreases over time—they also pay for the cost of labor to fix your car, which has been increasing over time.If you own an older vehicle that has depreciated in value, one way to lower your premium is to consider dropping nonessential coverages like collision and comprehension, which are unlikely to be mathematically worth it for older cars.
Understanding how premiums are calculated is confusing, but shopping for cheaper insurance quotes with the
Jerry
app isn’t! With a few simple clicks, Jerry can provide you with competitive quotes in under a minute and take care of all the paperwork. They can even assist you in canceling your old policy for free!”View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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