Insurance premiums are calculated based on the risk and potential monetary loss you can cause the company.
Insurance companies pay out very little to cover the costs to replace or repair your vehicle. The vast majority of their payouts are to pay hospital bills of people injured or killed in a crash. Not to mention the lawsuits that they will be hit with because of your actions.
A $1,000 junker can kill just as many people in a bad crash as a $100,000 luxury car.
