<VV> comprehensive, was corvair vandalism

[Frank DuVal]

> <>
> Message: 2
> Date: Thu, 22 Sep 2005 09:53:55 -0700 (GMT-07:00)
> From: Marc Marcoulides <hharpo at earthlink.net>
> Subject: Re:<VV> comprehensive, was corvair vandalismTo: 
> virtualvairs at corvair.org
> Message-ID:
> <17693721.1127408035418.JavaMail.root at elwamui-sweet.atl.sa.earthlink.net>
>
> Content-Type: text/plain; charset=us-ascii
>
> responding to this question...
> When I insure a new car and get Collision and Comprehensive coverage,
> the insurance company charges me a set premium based upon,
> among other things, the cost of the car. So how come my premiums do
> not go down as the car value goes down? I am getting less insurance every
> year, but the premiums do not come down. What's up with that?
>
> The value of the car is going down, however the cost of repairs 
> following a
> collision loss is more consistant. Insurance companies are allowed to 
> charge a rate
> that reflects the amount paid in claims for that model.
>
OK, here is the problem. I pay a premium for that new car and say it has 
a new value of $30,000. If I have a collision in the second year with 
$5,000 damage, the claim gets paid and maybe the premiums go up 5% 
(State farm) for a while to allow the insurance company to recover that 
loss.  Now I am a faithful customer and continue paying these same  or 
higher premiums for 12 years with no more losses. Now that same car gets 
into another wreck and the claim is for $5000. So the claim is the same 
as the previous collision so that will meet your  criteria:

" however the cost of repairs following a
collision loss is more consistant. Insurance companies are allowed to charge a rate 
that reflects the amount paid in claims for that model."

And yet they will not pay the full ammount of the claim for damage to my car even though I had to pay the full ammount of my premiums. 

The average collision claim was $1500 and is probably closer to $2000 now. So when I first buy insurance on the new $40,000 car the premiums are based upon a $2000 claim? But the insurance company is just being a nice guy and is willing to pay up to $40,000 that first year for a total loss? And then if I am a good cutomer for 15 years they reward me by maxing out my claim ammount at $2000? ( $2200 for State Farm). The premiums should reflect an actuarial table of claim severity and value of the car.  In the 15th year, the insurance company is not on the hook for a $40,000 claim, so why should I pay the same premium as the person with a $40,000 car? Is not the newer car more likely to be in an accident because it is typically driven more miles per year than the 15 year old car? Not in my family, but typically! So are you saying that older car drivers with collision coverage are subsidizing the new car owners?

Frank DuVal








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