> Liability insurance is based on other people’s cars.
This is what I dislike about insurance. If someone hits my (hypothetical) $100k car and ruins it, I win $100k, but if someone hits my $1k car, I only win $1k.
Yet the person that hit me did precisely the same action/error.
A big problem at the lower end is that insurance companies don't value cars based on their utility. I have a well maintained older car that is reliable and I trust the work that has been done, but it would be valued at around $2k by insurance. In order to buy a car with similar reliability would be closer to $5k. If someone else hits my car, it will be probably totaled at current repair prices and so I will have lost ~$3k.
Indeed, it doesn't take much damage for the insurance company to declare a low-end vehicle a total loss and salvage it instead of repairing. Could be just cosmetic damage and you find yourself in that problem.
As a result, I don't pay for coverage for my own vehicle in case I'm at fault. My jurisdiction now lets me opt-out of repair coverage others are at fault, but I couldn't stomach that. I think it's just for rental car cos that have their own repair facilities and to avoid ever getting a salvage title.
> think it's a bit unfair if you have to pay more for liability insurance because other people have chosen to buy more expensive cars
Yes, this. You can opt-out of insurance for your own vehicle if you want, but generally required to buy some minimum for everyone else's property that might be involved.
Insurance is not a punitive fine or lottery. If someone drives into your house and causes $100k in damage, you would also get $100k (assuming the minimum legal coverage is that high, which it might very well not be in many or even all states).
I specifically recall New Jersey letting poorer people drive “insured” by letting them purchase insurance for effectively fender benders, and if they caused more damage, good luck pursuing them.
You could also look at this the other way: the person driving the rust-bucket with 0 functioning airbags might win more injury compensation than the individual driving something solid with 9 airbags and walks away.
The point of insurance is to make you whole, not to make you better off.
If it did, you'd have more incentives for insurance fraud.
(Also it's the other guy's insurance that pays for it, and if the insurance industry disappeared overnight, and you had to sue for damages directly, no judge would award you more than the damages you sustained. (For an honest accident.))
This doesn't bother me. It's about making you whole after random events. It's better to imagine a meteor hitting your car. If it turns your $100k car into a crater, you have a $100k car afterwards. If it turns your $10k car into a crater, you have a $10k car afterwards. If the meteor hits a big open field, you still have your car. It's like meteors no longer exist, so you no longer need to worry about them. That's all insurance is.
This is what I dislike about insurance. If someone hits my (hypothetical) $100k car and ruins it, I win $100k, but if someone hits my $1k car, I only win $1k.
Yet the person that hit me did precisely the same action/error.