Why does adding a third car with no insurance coverage significantly raise premiums?
Right now, we have two cars and two drivers. We’re planning to get a budget-friendly used car for our teen, who only has a learner’s permit. We got a quote for adding this new vehicle, and even without coverage for it, our annual costs are set to increase by around $600. Our existing liability coverage remains unchanged, and the new car won’t have collision or comprehensive coverage.
I understand that bringing in a teen driver will cause our rates to soar, but I’m curious why adding this inexpensive car—uninsured—would also result in such a steep premium increase. If we were to have an accident in this car, no payout would be necessary for it.
This is more about curiosity than concern, as I didn’t expect the cost to rise this much.
Edit: For clarification, we haven’t yet added the teen driver; this increase is just from adding the third car to our current two drivers.
Edit 2: I’m not expecting to add the third car for free, but it’s surprising that it’s going to cost us 33% of our current premium. We currently pay about $1,700 a year with a $100 deductible for collision and comprehensive on a 2015 and a 2023 model, so an additional $600 for a third vehicle without those coverages seems excessive, especially since we haven’t even factored in the teen driver yet.
It can be quite surprising how adding a third vehicle, even without coverage, can significantly impact your insurance premiums. Here are a few factors that could explain the $600 increase:
Risk Assessment: Insurance companies evaluate risk based on various criteria, such as the number of vehicles and drivers in a household. Adding a third car increases their potential liability, even if it’s not covered. The insurance company sees it as an additional risk factor.
Statistical Models: Insurers use statistical models to set rates. They may have data suggesting that households with more vehicles tend to have higher accident rates. Therefore, adding another car can trigger a higher premium due to perceived increased risk.
Coverage Minimums: Even if you’re not adding collision or comprehensive coverage to the new car, the base liability coverage will still apply. This means your premiums may increase to account for the added potential liability associated with a third vehicle.
Teen Driver Factors: While your teen isn’t on the policy yet, insurance companies might already anticipate that their presence (once added) will further increase the risk profile of your household, which can also influence the initial premium quote when adding a third vehicle.
Discounts and Bundling: Sometimes, insurance companies provide multi-vehicle discounts; however, that might not apply equally to every vehicle added, especially if one of them is not covered.
Insurance Company Policies: Every insurer has different underwriting guidelines and pricing structures. It’s possible that the specific insurance company you’re with has particular policies that lead to a larger increase when adding vehicles, regardless of their coverage level.
Given the significant increase, it may be worth discussing your situation further with your insurance agent. They might be able to provide a detailed breakdown of how the rates are calculated and if there are any options to mitigate the increase.