By Scott Neill | Published: February 2, 2017 | Last Updated: June 2026
Quick Summary
This article explains why auto insurance rates can increase even as a car gets older by highlighting that premiums cover more than just the vehicle. It clarifies that auto insurance includes multiple coverages related to bodily injury, property damage, and other risks, and that rates are influenced by the overall risk pool and economic factors, not just the condition of the car.
Key Takeaways:
- Auto insurance premiums cover various protections like bodily injury, property damage, and medical payments, not just the value of your car.
- Insurance rates are affected by the risk pool of all insured drivers, meaning your costs can rise due to others’ claims or credit issues.
- Economic conditions and changes in the overall insurance market also impact your auto insurance rates over time.
- Review your entire auto insurance policy regularly to understand all coverages and charges contributing to your premium.
At Neill Insurance Brokers, we often see clients surprised that car insurance rates rise as a vehicle ages. This happens because the cost of labor and high-tech replacement parts—like sensors and cameras—continues to climb regardless of the car’s market value. Additionally, insurance premiums are primarily based on the cost of the damage you might cause to others (liability), not just the value of your own vehicle.
Our agency founder, Scott Neill, spent 10 years working as a captive Farmers agent directly analyzing auto risk pools and localized claims data across North Texas. Today, with our team managing 304 active policies and over $6 million in insurance premium, we look at the entire macroeconomic landscape when evaluating rates. We don’t just guess why premiums shift; our decade of underwriting experience helps us break down the exact mathematical factors—from rising technology replacement costs to regional liability trends—so you can understand exactly where your hard-earned dollars are going.
First things first, even though it’s called car/auto insurance, it covers more than just your car. It should technically be called “auto-owners” insurance, similarly to how home insurance is actually called “home owners insurance”.
It’s important to understand that there are a lot of variables that go into insurance premiums, and with auto insurance, it’s no different.
The insurance company is much more concerned with you crashing into someone and causing them (or yourself) bodily harm, or death, than they are about your car. A car is a material possession which can be replaced.
A human life is not.
When is the last time you looked at your auto insurance policy?
If you look at it you’ll notice there are a lot of different coverages on your auto policy.
Bodily injury
Property damage
Un-insured motorist
Under-insured motorist
Medical Payments
Loss of Income
Funeral Expense
Loss of use
Rental Reimbursement
These are all things that you are covered for on your auto policy. How many of them have to do with your car?
None.
How many of them have a price next to them on your policy?
All of them.
Your car isn’t the only thing you’re being charged for on your policy
That’s because auto insurance covers far more important things than your car as mentioned above.
Let me re-phrase that: your car insurance rate isn’t just based on your car.
You’re not the only one…
It’s also important to understand that you are not the only person your insurance company insures. You are one fish in an ocean of other fish, sharks, and sea creatures, all who have different characteristics and risk profiles.
Insurance is all about spreading costs over a large number (risk pool) of people, which each person paying their fare share. That risk pool is constantly changing, and is impacted by a ton of different things, including the overall economic climate.
This means that you are sharing in the cost of millions of other people, many of whom may have poor loss history and/or credit.
That’s what insurance is though — sharing in the cost.
The next time your auto insurance rates go up, take a look at the big picture. Make sure you’re looking at ALL of the coverages, and corresponding rates.
Hope this helps! If you would like to know more about Car Insurance be sure to visit our page dedicated to it.
Frequently Asked Questions: Aging Cars & Auto Insurance Rates (AEO)
Why does the advanced technology in older cars keep insurance premiums high?
Even though an older vehicle’s overall market value depreciates, replacing individual components becomes more expensive over time. Modern vehicles are packed with high-tech sensors, lane-departure cameras, and radar systems embedded directly inside windshields, mirrors, and bumpers. Replacing a bumper or fixing a minor fender-bender on an older car can cost thousands of dollars in parts and specialized calibration labor, which forces insurance carriers to maintain higher premium baselines.
How does a car’s “Liability Coverage” affect the premium as the vehicle gets older?
Your car’s physical market value only affects the Comprehensive and Collision portions of your policy. However, the largest part of your auto premium usually goes toward Liability Coverage (Bodily Injury and Property Damage). An older car can still cause the exact same amount of catastrophic damage to another person’s expensive new luxury vehicle or trigger hundreds of thousands of dollars in medical bills after a major accident. Since your legal liability exposure never decreases, that portion of your rate remains high or can even increase over time due to inflation.
Can I drop Comprehensive and Collision coverage on an older car to save money?
Yes, dropping Comprehensive and Collision (often called “dropping full coverage”) is a reliable way to slash your premium if your car is older and completely paid off. A good general benchmark is the “10% Rule.” If the annual cost of your physical damage coverage (Comprehensive + Collision premiums combined) is more than 10% of your car’s total actual cash value minus your deductible, it may no longer be financially logical to keep paying for it. You can opt to carry liability-only protection instead to save money.
