Here’s the latest reader question, along with my reply!
Chris asks: I can’t understand why my auto insurance premiums continue to increase year after year yet the blue book value of my vehicle decreases; even with a pristine driving record and the standard options on my policy. I thought that the premium was based on the cost of a total vehicle replacement based on the bluebook value. Am I wrong or have the variables changed over the past 5 years that determine the cost to insure a vehicle?
My reply: The answer is twofold.
First, just because they can. The insurance industry is a mafia; they make us offers we can’t refuse.
While it is true a given insurance company can’t force you to buy coverage from them, they all know you have to buy coverage from one of their number – and this inevitably causes prices to rise generally. If we were able to say: Look, you just raised my premiums again for no legitimate reason (such as a claim filed or a DWI cite) and it’s no longer worth it to me; if you can’t lower the cost, cancel the policy – That would impose market pressure on the insurance companies to offer competitive rates, which would necessarily be lower cost because (from their point of view) earning some business beats hell out of no business.
Second, because you – a good driver – are subsidizing the bad ones, which is the same problem with mandatory health insurance and explains the cost of that. Note that both are mandatory mafias – they literally practice extortion in order to wealth transfer our money to themselves and their clients.
There is also a third reason, but it applies to newer cars only: The repair costs have become so prohibitive that vehicles are often just thrown away. For example: If the driver and passenger air bags deploy in a relatively minor and otherwise repairable accident, the cost of replacing the bags and the dashboard and steering wheel and related parts can easily be $2,000 or more before any actual body damage is addressed. If the car has a retail value of say $10,000 it is very easy to reach the threshold (about 50 percent of market value) at which the car will simply be “totaled” and thrown away.
I am still paying $250 to “cover” my 2002 pick-up, which is worth maybe $4,000. I have not so much as scuffed a fender in 30 years and have a “clean” DMV record.
It’s absurd – and vicious. Over the past five years, I’ve paid more than a fourth of the value of my truck to the mafia… the prices continue to increase, never decrease.
I’d cancel the policy tomorrow if it weren’t for Luca…. you know, the enforcer the mafia will sic on you for not paying their extortion.
. . .
Got a question about cars – or anything else? Click on the “ask Eric” link and send ’em in!
If you like what you’ve found here please consider supporting EPautos.
PS: Get an EPautos magnet (pictured below) in return for a $20 or more one-time donation or a $10 or more monthly recurring donation. (Please be sure to tell us you want a sticker – and also, provide an address, so we know where to mail the thing!)
My latest eBook is also available for your favorite price – free! Click here.