Have you ever thought, “My car is getting older, shouldn’t my insurance premium be getting lower?”

You’re not alone. This is one of the most common misconceptions about auto insurance. The reality is that the majority of your premium has little to do with the value of your car  and everything to do with what it costs to repair or replace other people’s property if you’re involved in an accident.

The Real Reason Premiums Keep Rising

We can all agree that the cost of everything is skyrocketing, auto parts and repairs are no exception.

Just 5–10 years ago, a simple fender bender might have cost $1,500–$3,000 to fix. Parts were easy to find, and the repairs were fairly straightforward.

Fast forward to today, and that same minor accident could easily run $5,000–$10,000. Why? Because modern vehicles are filled with technology, sensors, cameras, and computer chips that all need to be replaced, recalibrated, and tested after a collision. Even small damage can require extensive and expensive repairs.

And then there’s the legal side. You can’t turn on the radio or drive down the freeway without hearing:

“Injured in an accident? Call now!”

All those lawsuits and medical claims drive premiums higher for everyone. Remember, insurance companies don’t create money, those costs get shared across all policyholders.

Insurance is meant to make you whole, not wealthy. It’s there to cover legitimate medical expenses and lost wages, not to serve as a “get rich quick” opportunity.

The Good News

Modern vehicles are safer than ever. They’re engineered to absorb more impact and protect passengers even if that means the car sustains more damage in a crash. And that’s a trade-off worth making. Cars can be replaced. People can’t.

Three Smart Ways to Protect Yourself Financially

Here are some practical tips to make sure you’re covered  without breaking the bank:

1. Carry Higher Limits.
   It might cost a few dollars more per month, but the protection is worth it. For example, if you only carry $25,000 in property damage coverage and you total someone’s $50,000 car, the insurance company will pay the $25,000  and you are responsible for the rest. Increasing your limits gives you far greater protection from financial risk.
2. Add an OEM Parts Endorsement.
   OEM (Original Equipment Manufacturer) coverage ensures that your vehicle is repaired with factory-made parts not cheaper aftermarket substitutes. Without this endorsement, you may be responsible for the difference in repair costs.
3. Consider a Higher Deductible.
   Insurance is all about risk-sharing. By taking on a bit more of the upfront risk (through a higher deductible), you often reduce your overall premium. This is a great way to balance coverage with affordability.

Coming Up Next

In our next post, we’ll break down what liability limits really mean — and how to make sure you’re properly protected when it comes to your auto insurance coverage.