Does anyone understand how car insurance works? Please help me the best solution.

Hi, recently my car insurance went up dramatically from $1100/yr to $1700/yr. I had insurance with Geico for since May, 2008. So far, i had one speeding ticket and 2 claims and insurance company paid $1150 toward claims from their side. Now, they increased from $1100 to $1700/yr and I need to pay this much amount for the next 3 years since i had 2 claims in a year. So, if we take 5 years period and assuming i claim nothing in the next 3 years, i pay a total of $7100[2*1000 + 3* 1700].So, in 5 years, insurance company pays me 1150 and I pay 7100. Altogether, i pay more than $6000. In addition, we get claims registered in car history and on my driving history. I don't see any advantage of having car insurance in my case. You can say if my car crashes and they pay full amount, but again they charge you when you take insurance to recover those charges. Does anyone know Where my $6000 money go. I checked with other insurers and they were more expensive than Geico. Could someone please suggest me the best way to save on my car insurance. My car value is around $8000. thanks in advance for your info.

In your case...I would stay with Geico and be glad they haven't dropped you, but since you simply want a way to lower rates without any understand of how insurance works, I can almost guarantee this will lower your rates:

1. Pick up the phone
2. Call Geico
3. Ask them to make your policy "liability only"
4. Tell them you want a high deductible, like $1000, that saves you money
5. Tell them you want the state minimum coverage, that also saves you lots of money.

I won't say this is the best advice for your situation, but it will lower your premiums.

This won't help you much at this point, but in the future, if you had two total claims that they paid out $1150 for, you might want to pay out of pocket to get them fixed. In this case, they paid $1150 and now it'll cost you $1400 over the next two years. Assuming you paid a $250 deductible (because it makes my math work) you could have shelled out $1650 and broken even right after two years.

nalla said: Hi, recently my car insurance went up dramatically from $1100/yr to $1700/yr. I had insurance with Geico for since May, 2008. So far, i had one speeding ticket and 2 claims and insurance company paid $1150 toward claims from their side. Now, they increased from $1100 to $1700/yr and I need to pay this much amount for the next 3 years since i had 2 claims in a year. So, if we take 5 years period and assuming i claim nothing in the next 3 years, i pay a total of $7100[2*1000 + 3* 1700].So, in 5 years, insurance company pays me 1150 and I pay 7100. Altogether, i pay more than $6000. In addition, we get claims registered in car history and on my driving history. I don't see any advantage of having car insurance in my case. You can say if my car crashes and they pay full amount, but again they charge you when you take insurance to recover those charges. Does anyone know Where my $6000 money go. I checked with other insurers and they were more expensive than Geico. Could someone please suggest me the best way to save on my car insurance. My car value is around $8000. thanks in advance for your info.

You could stop submitting small claims (2 claims for a total of $1150) and/or stop getting speeding tickets to keep your insurance rates lower.

In addition, you could self-insure the comprehensive and collision portion of your insurance. This assumes you are able to cover the partial repair or total loss of the vehicle, if it is damaged. It also assumes you do not have a loan outstanding on the vehicle, which likely requires full auto insurance coverage.

ETA: I'm a slow typist.

mwa423 said: 1. Pick up the phone
2. Call Geico
3. Ask them to make your policy "liability only"
4. Tell them you want a high deductible, like $1000, that saves you money
5. Tell them you want the state minimum coverage, that also saves you lots of money.

This won't help you much at this point, but in the future, if you had two total claims that they paid out $1150 for, you might want to pay out of pocket to get them fixed. In this case, they paid $1150 and now it'll cost you $1400 over the next two years. Assuming you paid a $250 deductible (because it makes my math work) you could have shelled out $1650 and broken even right after two years.
I don't know what state you live in, but in every state I have lived in the liability insurance I buy cannot have a deductible. Only the collision and comprehenive insurances (for damage to my car) have deductibles.

I am completely with you Mr civ2k1. even if you never did claim, you still have to pay $800/yr for your life time. I feel like insurance companies rob people of lot of money this way. I never understand the logic behind this system. This is like paying taxes on your paycheck every month. There is noway to escape from that.

reply to mwa42 -- my deductible is $500 which is required by car loan company. I tried all the options but no east way out of this.

ZenNUTS -- You might have thought that I did big accidents, that was not true. Once i hit my garage pole and the other one was very silly, my front car was suddenly stopped on 40 mph road and just hit very very slowly and i checked the spot where i hit and even driver agreed there was nothing, you know how car mechanics work in USA, they charge nothing less than 600 even for small thing. I know you guys are adopted to this whole system but I am new to this system and trying to understand the bigger picture. And one more thing, the driving ticket i got was for driving 79 MPH on interstate I-90. How many time you drove slower that that speed on freeways.

nalla said: I am completely with you Mr civ2k1. even if you never did claim, you still have to pay $800/yr for your life time. I feel like insurance companies rob people of lot of money this way. I never understand the logic behind this system. This is like paying taxes on your paycheck every month. There is noway to escape from that.

But then there is the chance that today on his drive home from work Mr civ2k1 causes an accident which is his fault and causes the other vehicle's driver $300,000 in medical bills in addition to whatever damage he did to the car. Maybe Mr civ2k1 is rich enough to afford to pay that, but I am guessing at that point he would be pretty glad about having paid his $800/year so the insurance company pays and not himself. Insurance is all about protecting yourself against catastrophic loss, the kind that very likely would bankrupt you and devastate your life. Many Americans seem to think insurance should also be used to protect yourself from the small losses too, but it is always better to self insure in these cases. In both of your claims it would of been far smarter to pay out of pocket, but I guess you have figured that out by now.

nalla said: I am completely with you Mr civ2k1. even if you never did claim, you still have to pay $800/yr for your life time. I feel like insurance companies rob people of lot of money this way. I never understand the logic behind this system. This is like paying taxes on your paycheck every month. There is noway to escape from that.

Lets assume you are someone like me, who maybe files a claim 1x every 10 years or so. I pay $1800 a year for full coverage with very high limits. 1x I filed a claim in the last decade, which I was not fault at all because my car was hit while parked in a mall, and the driver left no note or anything and my insurance company ended up paying almost $30k for repairs, and my car was not totaled and was drivable. And my insurance did not go up at all. The claim I had before that was over a $20k claim also as I drive an expensive car so any time it goes into the Body Shop the repairs are always going to be $10k+ as I lease a new car every 3 years so I always drive a current car. Sure if you drive a beater, you might think your getting ripped off, but think of it this way, god forbid you hit say a Rolls Royce, Bentley or even some Mercedes or BMW, I do not car if that accident in your opinion is minor the damage to those cars could end up being $10k+ super easy while the damage to your beater might be under $500.

So you can not look at the damage to your car only as how worthwhile insurance is vs the value or amount it costs to repair you car, because if you crash into a Rolls Royce Phantom which starts at $450,000 as a minor accident could be $50k + to repair so if you have any assets at all and are under insured be prepared to kiss those assets good bye including your home, bank accounts and non retirement brokerage accounts. You can not control who you hit, or who hits you and what % of the accident the insurance will determine is your fault either.

lotusgardener said: 3. Take a safe driving class, search it on here or SlickDeals. It saves you cash money with Geico for about an $18 investment.Before he does this, he might want to take a look at his state's requirements for safe driving discounts. In my state, for instance, you are statutorily guaranteed a 10% discount if you take a class that complies with certain requirement but only if all the drivers listed on the policy take this class and only if none of the insured drivers have committed traffic offenses in the past 3 years and have had any claims over the same time period. In other words, in my state that OP would waste time and money taking a safe driving class as it would not get him a discount.

dolmar said: You can not control who you hit, or who hits you and what % of the accident the insurance will determine is your fault either.

I call it being a safe driver. You can actually control your car and make sure you don't hit people.

scrouds, could you please share our friends the list of places cops hide? i was driving from chicago to new jersey and i got ticket in Pennsylvania

But if I crash my car or if we hit Rolls Royce, Bentley or even some Mercedes or BMW [which is very rare], the company will pay the amount at that time, but again they will recover that money from you in your life time right? So, the amount that we are paying everymonth is just the installment for the future accidents.So one who hits cars [Rolls Royce, Bentley or even some Mercedes or BMW] will get full justice and one who drives safely will have to pay money for life time. I am just trying to understand and convince my self that what I am paying is for good. I should have paid my self for smaller claims and now i know that. So the best way to save on insurance is -- drive safe, never claim on accidents that you can afford and you will end just pay $800 - $1000/yr in your life time.

nalla said: But if I crash my car or if we hit Rolls Royce, Bentley or even some Mercedes or BMW [which is very rare], the company will pay the amount at that time, but again they will recover that money from you in your life time rightNo, they wont recover any of that loss after I change insurance companies 3 months later

GreyRabbit -- why is car insurance mandatory? I just wanted to pay my self if I make any accidents? Do I have that option ?

scrouds said: Me.

I'm not going to claim I don't break the law, but I don't bust down the highway at 80 either. Plus I know where the cops hide.

Maybe you live somewhere weird like Ohio but in most states the speed limit is 70 MPH on interstates. Usually the only people that go 70 are in the right lane. Everyone else goes well above the speed limit. If anyone wants to continue speeding, I recommend a radar/laser detector.

nalla said: GreyRabbit -- why is car insurance mandatory? I just wanted to pay my self if I make any accidents? Do I have that option ?

You can't afford it. Consider astronomical medical bills and personal liability.

Plus, you're paying for uninsured motorist coverage. When someone in a beater plows into your $8K financed ride and they don't have insurance, who is going to pay your medical bills and replace your car? They're judgment proof and now you're out that money as well.

And this is all moot anyway b/c you have to carry at least liability just to get behind the wheel. Suck it up and learn how to drive more carefully.

nalla said: But if I crash my car or if we hit Rolls Royce, Bentley or even some Mercedes or BMW [which is very rare]

That depends where you live, if you live in middle america maybe you don't see those kinds of car often, but if you live in Manhattan, West Los Angeles, Silicon Valley, New York Metro area, parts of Miami, Chicago, San Diego, San Francisco or any other major cities with large affluent area's then you will see many of those cars driving around the city. You will see many people in those same area's driving beaters worth less than $500 of which many of them are uninsured illegals.

caterpillar123 said: scrouds said: Me.

I'm not going to claim I don't break the law, but I don't bust down the highway at 80 either. Plus I know where the cops hide.

Maybe you live somewhere weird like Ohio but in most states the speed limit is 70 MPH on interstates. Usually the only people that go 70 are in the right lane. Everyone else goes well above the speed limit. If anyone wants to continue speeding, I recommend a radar/laser detector.Pretty much most of the Northeast has speed limits of either 55 or 65 MPH on Interstates. OP was going atleast 14 mph above the speed limit. That is by no means safe driving, specially in the winter.

ZenNUTS said: nalla said: ..the driving ticket i got was for driving 79 MPH on interstate I-90. How many time you drove slower that that speed on freeways.I'm speechless..

This really is not that out of the ordinary, depending on where OP was driving on I-90. In some parts of Chicago, you'd get run over for driving 70 and be driving with the flow of traffic while doing 79. I live in Michigan, where the posted highway speed is 70, and drive 75 most days during my commute. Even doing 5 over, I am passed by more cars than I pass. In many places I've been, driving the speed limit is a good way to cause an accident.

bbyf16 said: In fact, anyone can drive your car and still be insured, as long as you don't rent it out.It works that way in the US too.
So that brings me to my question, how in gods name are they making any money? My insurance rates for my car is about 2% of the car value annually.If they don't surcharge drivers, then good drivers are paying extra in order to subsidize bad drivers. I'm not familiar with the Indian market. Perhaps the government is subsidizing the auto insurers?