Why does it go up? The price isn't as high as it is because there's nothing better. It's based on the expected cost to the insurer, and that should drop when the predictability of the other vehicles on the road increases.
In a way they go up because they can. If you look at it from their point of view. It is an event which they can point to and justify and say "sorry, this is our policy" and just raise the rates.
Now of course if they charge too high, then you could go to a competitor. But there is this CLUE database (I just learned about in a sibling comment here) which apparently is shared among insurers and depending on what is there (or what is not there! -- such as, it was really just an accident) you get labeled and dropped. So even a competitor might decide it is safe to stay away from you.
This is a frequent argument I keep seeing about the cost of insurance rising as autonomous vehicles are introduced. There's no reason they'll rise past what they're currently charging; insurance takes into account current risk. In the future, the risk if anything should decrease.
Yes, this is my point: rate increases after accidents are done by choice of the insurance company, not because their risk management requires them to do so, as the grandparent post implied:
> Premiums go up after an accident because it is more likely that you are a poor driver and likely to have another accident.
No, premiums go up in that situation when the insurance company thinks they can do so and not lose too many customers. As you point out, not every insurance company operates this way.
An insurance company only cares about managing risk and revenue across the entire pool. They plan to pay out a certain number of claims, so any given accident might simply be fulfilling the actuarial expectations and not altering their risk calculations at all.
The whole point is that in the post-accident customer's mind it is NOT an arbitrary price increase--the customer feels that they "earned it" by getting into an accident.
But all the insurance company cares about is revenue vs. expenses across the entire pool. If they can charge one customer more, it allows them to charge another customer less--like, by advertising a low fee for new signups.
If insurance is a profitable product today (it is), why would it skyrocket in price just because there are safer cars on the road (presumably paying lower rates)?
If your theory is that they can raise prices arbitrarily for profit, then you have to explain why they have not already done so.
Insurance companies complete on actuarial accuracy. I'd rather bad drivers pay more, and be in incentivized to drive better, than young drivers and all drivers pay more.
why would premiums be higher than they are now? Premiums for automatic should be lower. No reason for current premiums to go up. With all other automatic cars on the road, even a man driven car is less likely to be in an accident than currently. Premiums all around should go down.
Ah, okay. Then to answer your question: because those cars' rapid rise into the top 20 on that list means that there's an uncertain risk calculation (and one that old rates do not reflect) and so the insurer isn't willing to bet that the rise won't continue.
It makes a difference because insurance companies don't have unlimited ability (even collectively) to set prices, since there if an alternative that they don't control.
This was the question. A huge chunk of a lot of people's insurance isn't the insurance to fix your car, it is to fix the other guy's car. If the average cost to fix the other guy's car keeps going up, your insurance will end up going up given a fixed risk level.
Perhaps it would make more sense to think of it as buying “up to $50k”;they’re certainly not paying out the whole amount every time.
If more expensive cars leads to more expensive claims on average, the price of insurance might reasonably go up even if the worst-case exposure is the same…
Because the cost of your vehicle is a small fraction of their total liability.
Suppose your insurance cost is 100$/month for a Subaru and 110$ for a R1T but only 90$/month for liability + personal injury. Now your total bill increased by 10% while they are charging you 2x to insure the vehicle itself.
They may also be getting this calculation wrong, but it’s unlikely to change that much.
I don't think that is necessarily true.. The cost of insurance is based on the average expected payout per customer... I don't think the average payout will increase, as being a human driver won't suddenly become MORE dangerous, at worst it will stay the same.
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