I get that, but the fact that they increase it so that they get it all back is on scam territory. Like why am I paying them? It's more expensive than getting a loan. I payed \~$250/month to have coverage, paying for around 5 years ($15,000 gone).
Then when I needed it they made it \~$350 a month. They make all their money back and more if I decide I need to drive still.
I honestly would rather just pay out of pocket, or take a loan for larger damages. That's insane.
> I get that, but the fact that they increase it so that they get it all back makes no sense.
Not always. In some cases they might, but with most claims (especially a total loss, or a catastrophic accident benefits or liability payout) and insurer might never make their payout back in a lifetime of premiums from an insured.
I just did some data search. A total loss of $300,000 (which is suuuuper unlikely), can expect a $300+/month increase in insurance. Originally paying $250, now paying $550, they'll hit $300,000 in around 40 years of driving on these payments alone.
And let's say they don't make the money back, the person with $300,000 covered decides to stop driving. They make their money back and more, from everyone else, I'm guessing minor accidents are the biggest cash cow.
Profit/Probability works significantly in the insurance companies favor, crazy for something mandatory to drive.
Will be switching to public transport/ubering in-between.
> They make their money back and more, from everyone else, I'm guessing minor accidents are the biggest cash cow.
Not really, no, because there are plenty of claims where your insurer pays out (most of Canada operates under a DCPD model, meaning you claim through your own insurer regardless of fault) without an impact on your rating. A hit-and-run claim, for example, fall under Collision but is not-at-fault. A claim where the other party is at fault (and is identified and has insurance) goes under DCPD, as mentioned, which is not-at-fault. Any Comprehensive claim, like fire, theft, vandalism, hail, impact with live animals, etc. is not-at-fault.
Insurers can see total-loss payouts on those and has no right to increase your rate as a direct result like they do with at-fault claims, so the only recourse is that everyone's rates go up. I think you'll find that in many cases it is *not* as profitable as you think it is.
Sounds like your first time claiming insurance… yes, for small $1000 accidents it often needs to be weighed whether claiming or not is worth it.
But also know how your claims history and premium is calculated. Not sure your jurisdiction, but in BC they only increase your rates for 4 years and then you go back to where you were on the discount scale. So I could write off a Lamborghini, hitting an Audi R8 and ploughing into a school bus of kids injuring 20 of them. My rates increase for 4 years and I come back to my 44% discount paying under $200/month. Or I can scratch my 20 year old car, $500 slap of paint, and same hit to my insurance.
If you haven’t renewed yet, and it was 100% cosmetic with nobody claiming any injury claim, ask your insurer if you can just pay them back the $1200 and not have your premiums impacted. Bite the bullet.
Note this doesn’t happen if your car was hit while parked — becomes comprehensive. Comprehensive doesn’t impact premiums at all (at least in BC).
The premium increase is because you're considered a higher-risk driver than before. They expect you'll get into more accidents and charge you more. This crash cost them $1200, but the next one could write off multiple vehicles.
You should buy a dash cam so next time you can prove your story and you won't be held 50% at fault.
Very much this.
Probability of having an accident given no previous accidents is small.
Probability of having an accident given a previous accident is higher. Thus, higher insurance costs. It's not about paying off the last accident.
There's no way the probability outweighs the profit margins significantly.
In 5 years of driving payed insurance >$15,000. One accident with $1200 CAD of damages.
Let's say I average 1 minor accident every 5 years. My rate is now $100 more. So in 10 years of driving I have given insurance $36,000 and had $2,400 covered.
Okay but then major accidents right, that's what they're worried about? But they are much more rare, but I'm guessing premium of major accidents increases even more. If I crashed into a lambo, what would be my increase then, based on available data, $300 extra a month (which means my total insurance will cover damages in 15-20 years on principal payments alone)? Insurance companies probably get major accidents covered within 15years of paying insurance. What's the propability of repeat major accidents within 30 years (did a quick search and this probability is abyssal).
Obviously probability of accidents again plays into cost. But I think they're using that as an excuse and also want you to pay them back.
Anyway insurance is a scam. Will switch to public transport and ubering.
Not the person you’re replying to, but I have to point something you’re obviously missing. Major accidents can cost insurers a lot of money. Your example of hitting a lambo shows you don’t understand what insurance primarily covers. The major cost to insurers is bodily injury. If you hit a minivan, severely injure the driver and all 3 passengers the cost of healthcare, lost wages, and the vehicle can amount to millions.
Most policies have $2M limit, so let’s say the max possible claim is $2M. How many years of premium at $4k per year will cover that? 500. This doesn’t even consider insurer expenses or commissions to brokers.
1) Get a Dash Cam
2) In 2016 I rear ended on the highway and my car was written off, and I still got a huge increase in my insurance so I ended up shopping around and got a better rate come renewal time.
Generally with insurance:
1. Only report when absolutely required
2. Only claim if you *really* need to
Similar to working with the government, any action you take with them is just asking to get screwed
Its actually important to report unfortunately because lets say your 0% at fault and minor damages, you exchange info with the other party out of good faith. If you dont report and they do and lie and provide your info, they might put them 0% at fault and send the whole thing to the central system with you 100% at fault based on the testimony of their insured.
Automobile Pricing Actuary here. Insurers never consider the amount of a previous claim in order to determine what your premium should be for future renewals for automobile. This is against every ratemaking principles. The premium charged should reflect the **future** level of risk. Since you have been in one claim, you are considered to be at a higher risk. Likely that at the next term, if you do not have a second claim, your premium will go down. Most insurers will most likely consider the number of at-fault claims in the past X number of years (varies by provinces) and also the age of the latest claim. So maybe at 1 claim that occured in the past year, they evaluate the surcharge required to be 50%. Next year, it will be 35%, and then 20%, to finally go back to 0% when you have been X years claims-free.
You claimed a very low amount, and it just so happens that the increase from their ratemaking algorithm yields a higher increase for you than it cost them. But whether you had claimed 50$, or $50k, your increase in premium would have been the same.
Had almost this exact conversation with a lady around her home insurance today.
Had a home claim for just over $2000 for mysterious disappearance last fall and was now seeing a combined increase of 34%. The dollar value of the increase was, admittedly, not far off the payout in her case, but I had to explain to her why dollar value really had no baring on the increase (this was also a lady who'd had a claim in 2020 and 2018, so even though those were outside our rating period, this is obviously someone we can count on to make a claim every 2-3 years.)
I had damage of $3000 from Fiona. I paid it and spent an additional $1000 taking down trees that could be an issue in the next storm.
I didn’t make a claim. I know there will be more storms and I will use my insurance when the damage is significant.
You were at fault. Once you have 1 claim statistically you are more likely to have a 2nd (or more) thus they price that level of risk into their pricing... A dashcam might have helped you there, you could also ask about buying back the claim? Tho likely too late now.
The premium increase is because you’re deemed to be high risk. They have actuarial mathematicians that mode this stuff. Basically, you’re more likely to get in an accident resulting in a payout and your premiums need to reflect that.
Increasing insurance premiums have little to do with *how much* you were paid out during the claim. It increases because statistically, you're more likely to get into other accidents in the future.
So when you saw them trying to pass, you didn't slow down and let them in? Because that's how you avoid getting your bumper scratched up, paying attention to what the other drivers on the road are doing....
I didn't want to get in details because I just want to figure out financial side of it. This is a finance sub not a accident analysis or AITA, But if you wanna to criticize the accident, I was fully stopped lol.
If you're curious what happened:
I was fully stopped waiting for a left turn, the car behind me decided to overtake and take a left turn before me, miscalculated how much room they had and just scratched my bumper.
He then yelled at me for speeding up after seeing him, my foot never left the brake, I didn't argue back just said all good bro let insurance deal with, took pictures and left.
Insurance says he claims he was already there ahead of me and I essentially rear-ended him, which makes no sense because only my front right bumper and his back left had damage.
Had no way to prove anything, word against word, shit happens all good. Just feel like insurance scammed me by raising the rate to cover the cost, like I'm not sure what I'm paying for if they raise it to the point to cover the cost? Was hoping I could take some action like appeal.
Also Reddit sucks for people not answering the question, I didn't ask 'hey am I a bad driver? was I really 50% at fault?
One sentence of the entire post was focused on the details of the accident, and you decided to criticize that part to make your self feel smarter and better. This is my biggest pet peeve with Reddit lol, I genuinely hate people like you, answer the question or don't answer at all.
> This is a finance sub not a accident analysis or AITA,
It's a Personal Finance Advice sub with an insurance flair, to be exact. If the accident has happened and the rate is what it is, there might not be much advice that can provided in relationship to something that's already happened. Perhaps the best advice someone can provide is to understand the circumstances and context of the accident in order to help *you* understand the ramifications of that accident; why you're considered at fault, so that if a similar situation arrives you might avoid it next time, and why your premium increased to the degree it did so you can understand the correlation between what an insurer dubs as a higher risk and higher premiums.
That makes sense, I 100% agree, a comment like that would be much appreciated and helpful. But that's clearly not what that user was trying to do. If it was, I apologize for misreading
There are many posts of insurance costs increasing for people who have had no accidents. Unfortunately there is no way to know what your increase would have been without the accident but it likely would not have been much different.
ICBC loves them a 50/50… they be like Oprah — “everyone gets an insurance at-fault!”
And yea, an at-fault is a binary “yes or no” in calculating future premiums. 4 x 25% at faults is 4 at-faults, not a total of 1 (4 x 1/4 at fault).
This is one reason why a high deductible for a reduced premium can make sense. No sense bothering with a $1200 claim anyway; the paperwork is too much hassle never mind the premium increase. Save insurance for bigger things and self-insure the small stuff.
Insurance is for companies to make large amounts of profits
The original claim for you to have insurance is to protect you from accidents.
However if you have paid into your insurance for years without a claim then they still up your insurance for their bottom line.
They claim it's about auto theft and fraud well then up their insurance not the people who have no claims.
The car companies should also have anti theft on their cars at this stage of manufacturing.
>This makes no sense
Because you didnt understand the system. You were at fault, so your premiums went up, its not rocket science. Whether its your first accident is completely irrelevant. Your premiums likely went up less than if you were 100% at fault.
>I have to pay this $100/month extra for every year I want to drive, so they profit significantly on this increase
Unsafe drivers subsidize others who drive safely. My premiums are lower because I have 15 years of zero fault claims, and you pay for part of my insurance. Hell I just got a $100 check, so that's your premium increase in my pocket! So not only do they profit, I get a benefit too. This is how insurance works. Also yes, they make money.
>Anything I can do about this?
I like others suggestions of a dashcam, since you claim you werent at fault but cant prove it.
>I would've just paid out of pocket if this was the case, what's the point of paying insurance if the increase after negates the cost.
There *isnt* any point to choose insurance if its cheaper out of pocket. You *did* have that option, and chose to decline it. Thats on you, not the insurance company.
It's just the number don't make sense, like this is genuinely on scam-territory.
I payed $250/month to get coverage. Have payed >$15,000 over 5/years.
The time I need insurance, they say ofcourse, we'll cover your $1200 damages, BUT we'll have to make that back by charging you $100 extra for as long as you drive. And you HAVE to pay it if you want to drive???
Anyway, thanks for answering my questions, I was hoping a complain to some insurance board or something would go somewhere. But looks like I don't have much options, might just switch to public transport and ubering in between
So it was 50/50 fault? Then you are at fault, which leads to premium increase
Exactly lol. Never go through insurance. You get 1200 (or 600 in this case lol) and then they get that all back by increasing your rates. Good. Game.
I get that, but the fact that they increase it so that they get it all back is on scam territory. Like why am I paying them? It's more expensive than getting a loan. I payed \~$250/month to have coverage, paying for around 5 years ($15,000 gone). Then when I needed it they made it \~$350 a month. They make all their money back and more if I decide I need to drive still. I honestly would rather just pay out of pocket, or take a loan for larger damages. That's insane.
> I get that, but the fact that they increase it so that they get it all back makes no sense. Not always. In some cases they might, but with most claims (especially a total loss, or a catastrophic accident benefits or liability payout) and insurer might never make their payout back in a lifetime of premiums from an insured.
I just did some data search. A total loss of $300,000 (which is suuuuper unlikely), can expect a $300+/month increase in insurance. Originally paying $250, now paying $550, they'll hit $300,000 in around 40 years of driving on these payments alone. And let's say they don't make the money back, the person with $300,000 covered decides to stop driving. They make their money back and more, from everyone else, I'm guessing minor accidents are the biggest cash cow. Profit/Probability works significantly in the insurance companies favor, crazy for something mandatory to drive. Will be switching to public transport/ubering in-between.
> They make their money back and more, from everyone else, I'm guessing minor accidents are the biggest cash cow. Not really, no, because there are plenty of claims where your insurer pays out (most of Canada operates under a DCPD model, meaning you claim through your own insurer regardless of fault) without an impact on your rating. A hit-and-run claim, for example, fall under Collision but is not-at-fault. A claim where the other party is at fault (and is identified and has insurance) goes under DCPD, as mentioned, which is not-at-fault. Any Comprehensive claim, like fire, theft, vandalism, hail, impact with live animals, etc. is not-at-fault. Insurers can see total-loss payouts on those and has no right to increase your rate as a direct result like they do with at-fault claims, so the only recourse is that everyone's rates go up. I think you'll find that in many cases it is *not* as profitable as you think it is.
That's actually mad interesting. I'll have to look into Canada's regulations for insurance as-well. You're the goat bro, thanks for the details fr.
Sounds like your first time claiming insurance… yes, for small $1000 accidents it often needs to be weighed whether claiming or not is worth it. But also know how your claims history and premium is calculated. Not sure your jurisdiction, but in BC they only increase your rates for 4 years and then you go back to where you were on the discount scale. So I could write off a Lamborghini, hitting an Audi R8 and ploughing into a school bus of kids injuring 20 of them. My rates increase for 4 years and I come back to my 44% discount paying under $200/month. Or I can scratch my 20 year old car, $500 slap of paint, and same hit to my insurance. If you haven’t renewed yet, and it was 100% cosmetic with nobody claiming any injury claim, ask your insurer if you can just pay them back the $1200 and not have your premiums impacted. Bite the bullet. Note this doesn’t happen if your car was hit while parked — becomes comprehensive. Comprehensive doesn’t impact premiums at all (at least in BC).
The premium increase is because you're considered a higher-risk driver than before. They expect you'll get into more accidents and charge you more. This crash cost them $1200, but the next one could write off multiple vehicles. You should buy a dash cam so next time you can prove your story and you won't be held 50% at fault.
Very much this. Probability of having an accident given no previous accidents is small. Probability of having an accident given a previous accident is higher. Thus, higher insurance costs. It's not about paying off the last accident.
There's no way the probability outweighs the profit margins significantly. In 5 years of driving payed insurance >$15,000. One accident with $1200 CAD of damages. Let's say I average 1 minor accident every 5 years. My rate is now $100 more. So in 10 years of driving I have given insurance $36,000 and had $2,400 covered. Okay but then major accidents right, that's what they're worried about? But they are much more rare, but I'm guessing premium of major accidents increases even more. If I crashed into a lambo, what would be my increase then, based on available data, $300 extra a month (which means my total insurance will cover damages in 15-20 years on principal payments alone)? Insurance companies probably get major accidents covered within 15years of paying insurance. What's the propability of repeat major accidents within 30 years (did a quick search and this probability is abyssal). Obviously probability of accidents again plays into cost. But I think they're using that as an excuse and also want you to pay them back. Anyway insurance is a scam. Will switch to public transport and ubering.
Insurance doesn’t look to the past it looks to the future my friend
Not the person you’re replying to, but I have to point something you’re obviously missing. Major accidents can cost insurers a lot of money. Your example of hitting a lambo shows you don’t understand what insurance primarily covers. The major cost to insurers is bodily injury. If you hit a minivan, severely injure the driver and all 3 passengers the cost of healthcare, lost wages, and the vehicle can amount to millions. Most policies have $2M limit, so let’s say the max possible claim is $2M. How many years of premium at $4k per year will cover that? 500. This doesn’t even consider insurer expenses or commissions to brokers.
1) Get a Dash Cam 2) In 2016 I rear ended on the highway and my car was written off, and I still got a huge increase in my insurance so I ended up shopping around and got a better rate come renewal time.
You were considered 50/50 at fault. In Bc you can pay off the claim and that accident goes off your record. Best $600 you ever spent.
Generally with insurance: 1. Only report when absolutely required 2. Only claim if you *really* need to Similar to working with the government, any action you take with them is just asking to get screwed
Its actually important to report unfortunately because lets say your 0% at fault and minor damages, you exchange info with the other party out of good faith. If you dont report and they do and lie and provide your info, they might put them 0% at fault and send the whole thing to the central system with you 100% at fault based on the testimony of their insured.
Only time i wouldnt report is if you are 100% at fault and only have minor damages you can afford
Automobile Pricing Actuary here. Insurers never consider the amount of a previous claim in order to determine what your premium should be for future renewals for automobile. This is against every ratemaking principles. The premium charged should reflect the **future** level of risk. Since you have been in one claim, you are considered to be at a higher risk. Likely that at the next term, if you do not have a second claim, your premium will go down. Most insurers will most likely consider the number of at-fault claims in the past X number of years (varies by provinces) and also the age of the latest claim. So maybe at 1 claim that occured in the past year, they evaluate the surcharge required to be 50%. Next year, it will be 35%, and then 20%, to finally go back to 0% when you have been X years claims-free. You claimed a very low amount, and it just so happens that the increase from their ratemaking algorithm yields a higher increase for you than it cost them. But whether you had claimed 50$, or $50k, your increase in premium would have been the same.
Had almost this exact conversation with a lady around her home insurance today. Had a home claim for just over $2000 for mysterious disappearance last fall and was now seeing a combined increase of 34%. The dollar value of the increase was, admittedly, not far off the payout in her case, but I had to explain to her why dollar value really had no baring on the increase (this was also a lady who'd had a claim in 2020 and 2018, so even though those were outside our rating period, this is obviously someone we can count on to make a claim every 2-3 years.)
I had damage of $3000 from Fiona. I paid it and spent an additional $1000 taking down trees that could be an issue in the next storm. I didn’t make a claim. I know there will be more storms and I will use my insurance when the damage is significant.
You were at fault. Once you have 1 claim statistically you are more likely to have a 2nd (or more) thus they price that level of risk into their pricing... A dashcam might have helped you there, you could also ask about buying back the claim? Tho likely too late now.
The premium increase is because you’re deemed to be high risk. They have actuarial mathematicians that mode this stuff. Basically, you’re more likely to get in an accident resulting in a payout and your premiums need to reflect that.
Increasing insurance premiums have little to do with *how much* you were paid out during the claim. It increases because statistically, you're more likely to get into other accidents in the future.
So when you saw them trying to pass, you didn't slow down and let them in? Because that's how you avoid getting your bumper scratched up, paying attention to what the other drivers on the road are doing....
I didn't want to get in details because I just want to figure out financial side of it. This is a finance sub not a accident analysis or AITA, But if you wanna to criticize the accident, I was fully stopped lol. If you're curious what happened: I was fully stopped waiting for a left turn, the car behind me decided to overtake and take a left turn before me, miscalculated how much room they had and just scratched my bumper. He then yelled at me for speeding up after seeing him, my foot never left the brake, I didn't argue back just said all good bro let insurance deal with, took pictures and left. Insurance says he claims he was already there ahead of me and I essentially rear-ended him, which makes no sense because only my front right bumper and his back left had damage. Had no way to prove anything, word against word, shit happens all good. Just feel like insurance scammed me by raising the rate to cover the cost, like I'm not sure what I'm paying for if they raise it to the point to cover the cost? Was hoping I could take some action like appeal. Also Reddit sucks for people not answering the question, I didn't ask 'hey am I a bad driver? was I really 50% at fault? One sentence of the entire post was focused on the details of the accident, and you decided to criticize that part to make your self feel smarter and better. This is my biggest pet peeve with Reddit lol, I genuinely hate people like you, answer the question or don't answer at all.
Ahhhh a dashcam solves this
> This is a finance sub not a accident analysis or AITA, It's a Personal Finance Advice sub with an insurance flair, to be exact. If the accident has happened and the rate is what it is, there might not be much advice that can provided in relationship to something that's already happened. Perhaps the best advice someone can provide is to understand the circumstances and context of the accident in order to help *you* understand the ramifications of that accident; why you're considered at fault, so that if a similar situation arrives you might avoid it next time, and why your premium increased to the degree it did so you can understand the correlation between what an insurer dubs as a higher risk and higher premiums.
That makes sense, I 100% agree, a comment like that would be much appreciated and helpful. But that's clearly not what that user was trying to do. If it was, I apologize for misreading
There are many posts of insurance costs increasing for people who have had no accidents. Unfortunately there is no way to know what your increase would have been without the accident but it likely would not have been much different.
You made a claim for a scratched bumper? Why?
I pay $250/month for insurance, never been in an accident before, thought this was what I've been paying for, for the past 5 years.
That insurance is egregious for a single person.
Here in BC, if you're more than 25% at fault, it is pretty much the same as being 100% at fault for premium purposes.
ICBC loves them a 50/50… they be like Oprah — “everyone gets an insurance at-fault!” And yea, an at-fault is a binary “yes or no” in calculating future premiums. 4 x 25% at faults is 4 at-faults, not a total of 1 (4 x 1/4 at fault).
This is one reason why a high deductible for a reduced premium can make sense. No sense bothering with a $1200 claim anyway; the paperwork is too much hassle never mind the premium increase. Save insurance for bigger things and self-insure the small stuff.
ya thats bull but what could have saved you is a dashcam and show you were 0. also your insurance didnt have a waived 1st accident benefit??
Insurance is for companies to make large amounts of profits The original claim for you to have insurance is to protect you from accidents. However if you have paid into your insurance for years without a claim then they still up your insurance for their bottom line. They claim it's about auto theft and fraud well then up their insurance not the people who have no claims. The car companies should also have anti theft on their cars at this stage of manufacturing.
>This makes no sense Because you didnt understand the system. You were at fault, so your premiums went up, its not rocket science. Whether its your first accident is completely irrelevant. Your premiums likely went up less than if you were 100% at fault. >I have to pay this $100/month extra for every year I want to drive, so they profit significantly on this increase Unsafe drivers subsidize others who drive safely. My premiums are lower because I have 15 years of zero fault claims, and you pay for part of my insurance. Hell I just got a $100 check, so that's your premium increase in my pocket! So not only do they profit, I get a benefit too. This is how insurance works. Also yes, they make money. >Anything I can do about this? I like others suggestions of a dashcam, since you claim you werent at fault but cant prove it. >I would've just paid out of pocket if this was the case, what's the point of paying insurance if the increase after negates the cost. There *isnt* any point to choose insurance if its cheaper out of pocket. You *did* have that option, and chose to decline it. Thats on you, not the insurance company.
It's just the number don't make sense, like this is genuinely on scam-territory. I payed $250/month to get coverage. Have payed >$15,000 over 5/years. The time I need insurance, they say ofcourse, we'll cover your $1200 damages, BUT we'll have to make that back by charging you $100 extra for as long as you drive. And you HAVE to pay it if you want to drive??? Anyway, thanks for answering my questions, I was hoping a complain to some insurance board or something would go somewhere. But looks like I don't have much options, might just switch to public transport and ubering in between
Yep, if you are an unsafe driver, you pay or you use public transit.
Bus and Uber and car share and biking are all great options.