Why are car insurance companies quoting me rates at more than the value of my car?

Hummer · Mar 7, 2013

I live in New York City, I'm 22 years old, and I've had a driver's license since 17. I'm considering leasing a smart car as my job requires me to commute and travel daily in Westchester with camera and computer equipment. Every full coverage quote I look at for car insurance is in the ~$1500 PER MONTH range. Am I doing this whole insurance thing right?

senseless · Mar 7, 2013

Those are crazy numbers, even if you're just 22. Any tickets or chargeable accidents? It might be cheaper to use a rental car instead.

ucfgrad93 · Mar 7, 2013

$1500 a month? Your driving record must be something awful. What companies have you looked into getting insurance from?

mobilehaathi · Mar 7, 2013

How many cars have you totalled in the past 5 years?

firedept · Mar 7, 2013

Insane. At your age and a good driving record I would expect you to pay between $2500 - 3500 per year. That would be decent coverage.

duneriderltr450 · Mar 7, 2013

1500?

I'm 26 and have had a very bad driving record and mine is only $78 per month full coverage.

Macky-Mac · Mar 7, 2013

Hummer said:
....my job requires me to commute and travel daily in Westchester with camera and computer equipment. Every full coverage quote I look at for car insurance is in the ~$1500 PER MONTH range. Am I doing this whole insurance thing right?

you're using this car at work? maybe the quotes reflect the fact that it's for business purposes and not just personal use?

Macman45 · Mar 7, 2013

I'm afraid the same scenario exists in the UK...Younger drivers are being hammered by Insurers...It's a total catch 22...You can avoid the high charges by going on your parents insurance, but you gain no NCB if you do it that way...Truth is that somewhere down the line you have to take the hit.

My biddies 25 year old drives an old Audi...Nothing racy, just a 2 door diesel...They wanted 5 times the value of the car to insure him third party only.

Seems that this will only change when you pass the age of 26.

robbieduncan · Mar 8, 2013

How much damage could you do to another car? And it's occupants? Especially considering the frankly insane US healthcare system and it's costs? There is your answer.

designs216 · Mar 8, 2013

Male, 22, maybe not so great driving record, maybe not so great credit score -- it's the perfect storm to the insurance rackets. They know you've got no choice because all their competitors are going to treat you the same way. You, Hummer are their favorite customer. Come to think of it, your choice of vehicle may play into their hands as well...

sim667 · Mar 8, 2013

Macman45 said:
I'm afraid the same scenario exists in the UK...Younger drivers are being hammered by Insurers...It's a total catch 22...You can avoid the high charges by going on your parents insurance, but you gain no NCB if you do it that way...Truth is that somewhere down the line you have to take the hit.

My biddies 25 year old drives an old Audi...Nothing racy, just a 2 door diesel...They wanted 5 times the value of the car to insure him third party only.

Seems that this will only change when you pass the age of 26.

Lots of my students are being quoted £4000 for a £200 car, 3rd party fire and theft. They can reduce their insurance a lot though by having a black box fitted.

Something needs to be done, as it is ageism, pure and simple..... There was a similar problem with females being quoted much less than males over here, but all that happened was that female quotes went up to the same price as male quotes

Efrem · Mar 8, 2013

Insurance is not just to fix or replace your car. If you look at the premiums for specific coverages, you'll see that coverage for that is a small part of the total and is less (probably a lot less) than your car is worth. It also covers damage that you may do to other cars, people and so on. Even if your car isn't worth much, can you be sure you won't total someone else's $700,000 Lamborghini? Or put someone else in the hospital, with bills that can approach that figure?

eric/ · Mar 8, 2013

Something doesn't seem right.

I know people with DUIs that don't pay that much per month, and they are the same age or younger.

There's more here. What companies are you checking and what's your zip code?

jeremy h · Mar 8, 2013

Macman45 said:
You can avoid the high charges by going on your parents insurance,

Be careful if doing this (fronting) particularly if the car is being driven by, say a student, who is not at the parents home most of the time. My understanding is that if you crash and the insurance company can prove the parent wasn't the main driver (eg the car was kept away from the parents house etc) you're in big trouble legally and financially as you've made a false declaration on the insurance form.

A friends teenage son recently got insurance through one of those back boxes and is very nervous in letting either of his parents borrow his car as he's worried they'll break a speed limit etc. Talk about a role reversal!

prostuff1 · Mar 8, 2013

jeremy h said:
Be careful if doing this (fronting) particularly if the car is being driven by, say a student, who is not at the parents home most of the time. My understanding is that if you crash and the insurance company can prove the parent wasn't the main driver (eg the car was kept away from the parents house etc) you're in big trouble legally and financially as you've made a false declaration on the insurance form.

A friends teenage son recently got insurance through one of those back boxes and is very nervous in letting either of his parents borrow his car as he's worried they'll break a speed limit etc. Talk about a role reversal!

I think that so long as the child is still claimed as a dependent on taxes everything is fine.

As for the quote you got... holy crap. I pay in total about $600 a YEAR for full coverage on my 1998 S10. Granted I live in Columbus, Ohio so location might have something to do with it. If my car was not in as good a shape as it is I would not have full coverage on it.

jeremy h · Mar 8, 2013

prostuff1 said:
I think that so long as the child is still claimed as a dependent on taxes everything is fine.

I suspect that's a US / UK difference. It's considered fraud here if you fib when asked specific questions about usage. Insurance here is becoming a massive financial issue for a lot of people.

PatrickCocoa · Mar 8, 2013

Sign here, please . . .

Hummer said:
I live in New York City, I'm 22 years old, and I've had a driver's license since 17. I'm considering leasing a smart car as my job requires me to commute and travel daily in Westchester with camera and computer equipment. Every full coverage quote I look at for car insurance is in the ~$1500 PER MONTH range. Am I doing this whole insurance thing right?

As a few others have mentioned, you're not paying only for insurance to fix your car if it's in an accident or stolen, you're paying for insurance to pay other people who may get injured by anything related to your car.

The maximum cost to the insurance company of an accident or theft is the value of the car. But the maximum to pay to someone injured by your car can be several million dollars.

Tomorrow · Mar 8, 2013

Hummer said:
I live in New York City, I'm 22 years old,

There's part of your problem, right there.

I don't know about New York, but many states require you to have double the insurance limits if you lease versus buying.

Hummer · Mar 8, 2013

senseless said:
Those are crazy numbers, even if you're just 22. Any tickets or chargeable accidents? It might be cheaper to use a rental car instead.

I've faced this problem since the day I got my driver's license, and I've always rented cars because of this, but now, I need to commute between NYC and Westchester, and it's really tough to get to work without a car. I have no tickets, points, or chargeable accidents on my license.

ucfgrad93 said:
$1500 a month? Your driving record must be something awful. What companies have you looked into getting insurance from?

Nope. No accidents and no points. I have a clean record. I've been looking at quotes from Esurance, Progressive, State Farm, and GEICO. State Farm and Progressive weren't so bad, but they're still in the $600 a month range.

Macky-Mac said:
you're using this car at work? maybe the quotes reflect the fact that it's for business purposes and not just personal use?

I'm using the car to get to and from work.

eric/ said:
Something doesn't seem right.

I know people with DUIs that don't pay that much per month, and they are the same age or younger.

There's more here. What companies are you checking and what's your zip code?

Esurance, Progressive, State Farm, and GEICO. 11360.

davidinva · Mar 8, 2013

It appears the rates being quoted are based on using the car for business purposes, not your average personal (commuter) rate. Could also be if you mentioned the equipment being carried to them. At any rate (pun intended), something is not right there.

pixl8 · Mar 8, 2013

Has someone gotten ahold of your identity and been in a few accidents? Receiving premium quotes that high would make me want to find out. That's crazy money!

Macky-Mac · Mar 8, 2013

Hummer said:
....Every full coverage quote I look at for car insurance is in the ~$1500 PER MONTH range. Am I doing this whole insurance thing right?

the "full coverage" may be part of the problem. If you're asking for quotes on the same types & amounts of coverage as your parents might get, that could be a reason you're getting such high quotes. And leasing might require you to have collision & comprehensive coverage at levels well beyond what you would buy for a used car you owned.

I asked my nephew what he paid when he lived in the NYC area a few years ago and he thinks it was around $225 to $275 a month

malman89 · Mar 8, 2013

That's insane. What kind of car?

At 23 I bought/financed my current car - a Ford Focus - and I paid $660 (total) for 6 months back in June and $750 (total) for 6 months in December (something about ACA related increases), both with AAA.

The funny thing with auto insurance is how one can quote you at one amount and one at another. State Farm was at least double AAA, while Progressive and Esurance were over $1,000/6 months, but when I was looking at maybe buying a Chevy, they were by far the cheapest options.

Hummer · Mar 8, 2013

malman89 said:
That's insane. What kind of car?

At 23 I bought/financed my current car - a Ford Focus - and I paid $660 (total) for 6 months back in June and $750 (total) for 6 months in December (something about ACA related increases), both with AAA.

The funny thing with auto insurance is how one can quote you at one amount and one at another. State Farm was at least double AAA, while Progressive and Esurance were over $1,000/6 months, but when I was looking at maybe buying a Chevy, they were by far the cheapest options.

The quotes I received were for a smart car.

0dev · Mar 10, 2013

Hummer said:
I live in New York City, I'm 22 years old

There's your reason. You live in a city and you're 22. Insurance for young drivers, especially in cities, is always going to be insane. It's a shame, I know, I'm young myself and would love to actually be able to insure a car, but there we go.

I've been quoted £2,000 (~$3,000) a year for a car that's worth £100 (~$150) before. Which means the insurance company thinks I'm going to completely wreck the car twenty times every year. Ha.

Why are car insurance companies quoting me rates at more than the value of my car?

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