$116 Increase in Premium for Removing a Vehicle?
Hi everyone, my Progressive insurance is up for renewal, and I wanted to share something puzzling. We currently have a 1998 Buick on our policy with minimal coverage, which costs us $281 for six months. When I inquired about the cost if we were to remove that car, I was told it would actually increase by $116.
We do get a multi-vehicle discount since this is our third car on the policy, but I can’t wrap my head around how that discount amounts to $396 ($281 for the Buick’s coverage + the $116 increase). This seems like more than 30% of the total premium for all three cars combined. It feels counterintuitive—it’s actually more expensive to take a car off the policy. Has anyone else experienced this?
It sounds like you’re dealing with a perplexing situation regarding your auto insurance premiums. Insurance pricing can often seem illogical, especially when it comes to discounts and removing vehicles from policies. Here are some potential explanations for why removing the 1998 Buick would lead to an increase in your premium:
Multi-Vehicle Discount: The multi-vehicle discount isn’t typically a flat rate; it can vary based on the total premium of all vehicles. If the discount for having three vehicles is significant, removing one might reduce your overall discount more than you expect.
Coverage Minimums: Since the Buick has super minimum coverage, it may contribute more favorably to your overall premium when part of a multi-vehicle policy. When removed, your policy’s risk adjustment might actually lead to a higher base rate for the remaining vehicles.
Statistical Risk: Insurance companies often use complex algorithms to determine rates. They may have identified that having multiple vehicles lowers your risk profile, and removing one vehicle changes that calculation, thus making the remaining vehicles costlier to insure.
Administrative Fees: Sometimes, the cost of running a policy can include administrative fees that might be applied differently when you have fewer vehicles.
Rounding and Pricing Structures: Insurance companies also round up their prices and have specific pricing structures that may not make intuitive sense on the surface.
If you feel the increase isn’t justified, it might be worth discussing your concerns with Progressive again and asking for a detailed breakdown of how the premiums and discounts are calculated. Additionally, comparing rates with other insurance providers could help you find a better deal.