One of the most common questions we get is why doesn’t the cost of insuring my aging car ever go down? In order to answer that, we should first make sure everyone understands when a policy pays and how the age of the car impacts the cost of the coverage. In this particular post, we will deal with the part of the insurance that pays to repair the car.
Collision pays to repair your car if you damage the car by hitting something or over-turning the car. The Other than Collision coverage, OTC, pays if there is a deer hit, glass breakage, flood, fire, or theft. The thinking generally goes like this… “My car is worth less, so why doesn’t that cost go down?”
The simple answer may sound a bit snarky, but does your mechanic charge you less to work on your car since it is older? Of course not, so the cost of the labor involved in repairing a car is the same. What else goes into repairing cars? Paint is involved with most repairs. The cost of paint is the same whether it is a new or old car. How about parts? New parts for old cars aren’t any less expensive and if you are lucky enough to be able to find used or after-market parts, those may save a few dollars.
Fewer than 2% of all car accidents result in “total losses.” A total loss means that the car costs more to repair than the car is worth. This might be the only reason you might see a small reduction in the cost of your collision or OTC.