Auto insurance rate increases can occur for a variety of reasons. Having an at-fault accident, medical costs, car repair costs, and theft rates are all potential triggers for rate increases. Despite all the advertising about being able to save hundreds of dollars on your car insurance and all the available discounts, auto insurance rates have risen faster than the overall rate of inflation over the past decade.
When you are responsible for an accident(s), your insurance company may have to pay expensive claims and you are deemed a greater risk to them. As a result, insurance rates often increase after an at-fault accident. Some companies offer accident forgiveness meaning they will not raise your premiums after one at-fault accident, which does offer some peace of mind. However, you may be paying more for your insurance for the benefit of “forgiveness”.
Some insurance companies such as Pemco (only sold in Oregon and Washington) have strict standards for their insureds and may drop coverage on a policy after a single at-fault accident. While this may seem harsh, focusing on safe drivers can keep risks down and be reflected in the insurance rates.
The rapid escalation of health care cost has been well chronicled. Health care expenses have significantly exceeded the rate of inflation and are a major expense for auto insurers as injuries often occur in vehicle collisions. Insurers need to have the appropriate reserves to pay these expenses.
Auto insurers face costs when their own insureds are injured and when their insured is at-fault for the injuries of passengers and other drivers. Medical expenses may be covered under Bodily Injury, UM/UIM Bodily Injury, Personal Injury Protection and Medical Payments coverage. As a result, rising medical costs mean higher insurance costs as insurers need the money to pay these expenses and make a profit.
Auto Repair Costs
Car repairs are expensive and are a significant driver of insurance costs. As cars have more technology advanced features, parts and the labor for repairs has escalated. When a car sustains serious damage in a collision, it may be deemed a total loss and cars are getting more expensive. The average cost of a new car rose more than 30% over the past decade and stood at $29,217 in 2010. Vehicle theft is also a factor as it is covered under the comprehensive portion of an auto insurance policy.
How To Combat Auto Insurance Rate Increases
To keep your insurance rates low, it pays to comparison shop for car insurance. Rates can fluctuate frequently and vary substantially between companies and by state. On our website, you can compare rates from leading national insurers and lock in your lowest price. Just enter your zip code for free quotes and you could start saving hundreds off your current rates.