Increasing auto insurance premiums only adds to the already existing struggles in uncertain economic times. But you can always take steps to lower costs. Here are various factors that contribute to rising auto insurance premium rates across the nation.
1. Recorded Driving Behavior
a) Miles Driven:
The more people drive, the more their insurance rates will increase. A 2016 article in the Washington Post cited an AAA report that Americans were driving more due to cheaper fuel and other reasons. More miles imply an increase in the chances of an accident, which raises the insurer’s risk. The nationwide shutdown in March 2020 led to less traffic on roads, resulting in reduced car insurance premium rates.
b) Driving History:
You probably know that your driving record affects your insurance costs. In a nutshell, drivers with no accidents or violations are rewarded with lower premiums. Filing a claim in some cases can raise the premium, depending on the situation and the insurance company. The more money insurance companies have to pay out in claims, the greater the chances of a rise in premiums.
2. Fluctuating Insurance Industry Trends
Another reason behind the rise in car insurance premium rates is the changing insurance industry trends, such as the volume of claims and amounts paid for accidents. Data from the National Association of Insurance Commissioners reveals the average expenditure for claims rose every year from 2008 to 2017. This pattern has paralleled the rising number of property damage and collision claims filed.
3. High-Risk Vehicles
a) Fancy Sports Cars:
Since fancy cars attract attention, they also tend to be the most targeted for auto theft. So the more sporty extras your vehicle displays, the more likely you’ll pay a higher insurance premium. Again, it comes down to percentages as odds say certain vehicles are at higher risk of getting stolen than others. One of the most stolen cars is the Cadillac Escalade.
Another reason sports cars often roll with higher insurance is that they are designed to drive fast. This fact raises the risk for both the driver and the insurer. The Nissan 350Z has among the highest losses among midsize sports cars.
b) Cars Equipped with Sophisticated Technologies:
Owners of new vehicles with more complex technologies often pay more for repairs, which is another factor that drives up insurance costs. The more sophisticated automotive technology gets, the more auto shops invest in newer diagnostic machines. Essentially, everything that drives up auto repair costs impacts insurance rates.
4. Rising Medical Costs
Medical costs continue to increase for various reasons, such as a shortage of medical professionals. During the pandemic, medical facilities began offering more digital services due to overcrowded emergency rooms. This increase in demand for healthcare has pushed both medical and insurance costs up. But there’s a chance this factor will stabilize the more healthcare organizations move toward telemedicine.
5. Current Location
Another major factor that affects auto insurance premium rates is your zip code. Insurance companies issue different rates for different neighborhoods since studies show certain areas have more accidents and theft than others. Low-income areas often have higher crime rates. So whenever you decide to move, make sure you talk with your insurance agent to find out more about your new insurance premium.
A simple way to lower your auto insurance rates is to drive less. A lot of that decision depends on how far you live from your job, stores, and services. The pandemic has created much more work from home opportunities, helping people cut down on driving.
Hence, these are the factors that explain why car insurance rates are on the rise. Ultimately, you can control what you pay by being a safe driver and avoid high-risk factors that raise rates. If you have additional questions about auto insurance, contact the experts at Udell Family Insurance today. We are ready to assist you with all your coverage needs.