Do Auto Insurance Premiums Reduce When The Car Value Depreciates?
We bought our car 5 years ago in Virginia when it was new and just finished paying off the loan. We paid $23,000. Our Auto insurance premium was based on that value. After 5 years, it is now valued at $10,000 but my insurance agent (Travelers) says the premium does not change just because of depreciation. Is this true?
December 3rd, 2009 at 5:38 pm
The premium for physical damage (comp/collision) usually goes down with age, up to 10 years (as old as a car gets for insurance purposes), but claims experience can change that; if claims are higher than expected, it can stay high or even go up as the car ages.
The premium for liability coverages does not change due to age, but only by claims experience.
December 3rd, 2009 at 5:38 pm
There is no hard and fast rule that rates drop because of depreciation. However, if you no longer are required by the lien holder to have full coverage on the vehicle, you can reduce your premiums by dropping things you don’t need, or raising the deductible amounts.
You might want to talk to an independent agent to see what options you have with other companies.
December 3rd, 2009 at 5:38 pm
sooooooooooooooooo drop collision and keep liability and comp