why do insurace rates go up when you have an accident when you pay into insurance for that reason?

Question

please tell me if i'm wrong but isn't insurance a collection of peoples money to pay for an accident if there is one so there for your rates should never go up i personally feel insurance is a rip off and the govorment should make laws stating that an insurance company can only make so muck profit because agent are getting rich from ripping people off when they have a wreck

or get a ticket

Answer 1

It's not like a health savings account, where your own money goes to pay your own claims. It's about sharing the risk with groups of people with similar credit, driving, and claim history.

When you have zero accidents or tickets, well, you know one or two in a thousand are going to have an accident, so you have low rates.

Statistics show that once you have an accident or two, or have a ticket, you're MUCH more likely to have a second accident than someone who's NEVER had one, so you move into a higher risk tier, where maybe 100 people in 1000 are going to have an accident - and the rates go up.

Then, if you have a DUI, well, the odds are SUPER high you're going to have an at fault accident after that, like maybe 1 in 3, during the course of a year. So then you get moved to ANOTHER tier.

If you think auto insurance is a ripoff, pay cash for your car, and buy state minimum liability. That way, if you have an accident, YOU pay for your car repairs, and if you do more damage to someone else's car than you have insurance, YOU pay for that, too.

Insurance companies DON'T make profit on auto insurance, in general. They usually pay out about $1.05 for every $1.00 they take in. Oil companies make higher profits than that, and Coca-Cola makes even higher profit margins than oil AND insurance put together.

If you REALLY REALLY believe insurance companies are raking in tons of cash, buy their stock.

I don't, because the profit margins are too slim.

Answer 2

Insurance companies are in the same category as politicians and used car salesmen, they rip you off all of the time. My insurer has a No Claim Discount guarantee but introduced a safe driver discount too, so they can put the rates up and say "Oh NO, we didn't take your No Claim discount, this is different".
Also, when you try to make a home Ins claim they will tell you that whatever you are claiming is not covered, in the hope you will go away, but if you insist on a claim form, very often it is and they pay you out!!

Answer 3

Your are right and you are wrong. I know it hurts to know that your wrong.

Look at it this way, yes your rates will go up if you have an accident, unless they have first accident forgiveness. Then it won't.

Even if your rates go up. Think of it this way. If some thing happens and you were to kill some one or put them into the hospital, wouldn't you rather have insurance than to not have any? I'd rather have the insurance that will pay for my mistake than to not have any at all. Plus a million dollar umbrella policy is a good idea if you own property, as the person you hit will get a lawyer and if they see you have a house they will go for the gusto and nail you big time. So then it's also good to have an umbrella policy on top of your other policy.

Answer 4

Yes and No...

The insurance company assesses risk and they have found, through experience, that if you claim once you are more likely than the average person to claim again or cause a claim to be made against you. It makes sense then to weight your premium to take this into account.

The converse is also true, if you do not claim then you are less likely to in the future, hence the "no claims" system of reducing you premium.

It may seem unfair when you claim because something is completely out of your control but the insurance companies are just running a simple statistical analysis. Also remember they have to make a profit and cover their running costs so the overall premiums must outweigh the payouts.

Answer 5

Insurance concept works based on pooled money collected from customers in order to pay claims.

Insurance companies have their own ways in coming out with the premium charged on you.

Why they increase your renewal premium?
Reason 1: To discourage customer not to make small claims
Reason 2: Mitigate their risk profile & to make them more profitable
Reason 3: So that you will be more careful and less accident prone.

How to select an insurer?

Look at their overall risk profile in an insurance class. Some bigger insurer will have a bigger portfolio and the revised premium after claim can be lesser than those who has a smaller portfolio


Thanks

[e-mail]
malaysia insurance portal
www.einsuran.com

Answer 6

it variety of feels incorrect because of the fact your "know-how" is faulty. it is not something like a economic employer. coverage is in line with threat. Your coverage company is taking a threat in insuring you against any losses. Your preliminary fee is in line with their knowledgeable wager of ways lots threat you pose to THEM. as quickly as you have an twist of destiny, your point of threat will strengthen, and subsequently, your expenditures. coverage is a company, which operates on earnings, in basic terms like different agencies. in the event that they had to pay out 2 thirds of what you have paid in, it is not lots earnings.

Answer 7

Why is it when someone doesn't understand something, we are being ripped off????

Answer 8

preach on brother! i have always thought that insurance companies take advantage of people