why does auto insurance rates go up after manditory insurance laws pass?

Question

the insurance companies promise that passing these laws would always lower them

Answer 1

More importantly, how do these laws ever stand up in court? The idea behind auto insurance, is that you pay a premium for accidents you haven't caused yet, based on the statistical likelihood that you will. How is the state mandating such a product not a violation of Innocent until proven guilty? What if they went into urban areas and started requesting young men to start coming into the jail on weekends, based on the statistical likelihood that they might someday rob a liquor store?

Steven: Thanks for the kind word- but again, how did they justify it?

Answer 2

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RE Why does auto insurance rates go up after manditory insurance laws pass?

the insurance companies promise that passing these laws would always lower them

Answer 3

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RE :Why does auto insurance rates go up after manditory insurance laws pass?
the insurance companies promise that passing these laws would always lower them
Follow 14 answers

Answer 4

HA!!!! Try living in NJ which has the highest auto insurance rates in the country and where auto insurance has been mandatory for 60 years. It is controlled by the MANDATORY vehicle inspections that take place BEFORE you are able to drive on the roads. The inspections get you a sticker for the front windshield...... It is on display at all times... When you go for the inspection, you must have a valid NJ Drivers license (they check it on the computer for violations), the car registration (they check the VIN number), and proof of insurance........without ALL of those things, you fail inspection and a nice big red sticker is put on you windshiedl with "FAILED" prominently displayed.

They have us by the short hairs here.....we have NO choices. If you "shop for rates" you find that all of the greedy bas***** fall within 20 - 25.00 with the prices.

Here in NJ, it's a big racket with all of the major insurance companies making a killing.

Answer 5

The insurance companies are assuming a higher level of risk in taking on the less insurable.

If the only people they insured were perfect drivers, with low risk, and you were among them, you'd expect to pay less than average for insurance. If you throw a few really lousy drivers into the mix, you'd expect there to be more accidents, meaning more payouts, and thus a higher risk to insure the whole group of you, and thus your premiums would go up.

Insurance is not an entitlement, it is a form of gambling against risk.

Answer 6

The insurance companies DON'T promise the laws will lower rates. The politicians make those promises. When was the last time ANY law accomplish what they said it would.

Be forcing companies to insure people that would otherwise be rejected, the laws increase the cost of claims. That money has to come from somewhere.

beardog4314: My position on insurance aside, you question is IDIOTIC. The laws have ALREADY been upheld by the courts.

Answer 7

Part of your rate is the limits of liability you carry. I suppose you are talking about Texas where they just raised state required limits from 20/40/15 to 25/50/25. The reason your premium is going up is because your coverage amount is going up. Insurance companies dont control what the state required limits are. Hope that helps.

Answer 8

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Answer 9

Because the pool of people insured now includes more high risk drivers. With mandatory insurance, all companies are required to take some of the high risk customers, and the state limits what you can charge them, so the rest of us end up paying a little extra. Sounds sucky, but we're the ones who are protected by them having insurance when they hit us.

Answer 10

Auto insurance is a scam!