Why Your Auto Insurance Rates May Increase

March 23rd, 2017 by admin

Auto insurance rates are going up across the board, which leaves many drivers asking questions about why those costs are going up. Some drivers are left feeling like their rates are increasing for no reason. That really isn’t the case, though.

Insurance is a business of balance. Balance is something insurance companies must find in the risks they take and the risks they pass on to their customers. These are a few contributing factors behind recent rate increases and things you might be able to do to help offset some of those rate increases.

Fatalities from Accidents are Rising

We are now approaching historic highs for auto accident fatalities in a year. We may soon surpass them. The year 2015 saw the sharpest increase in auto accident fatalities in a single year since 1966. Unfortunately, the two-year picture isn’t shaping up to be any better with current estimates eyeing an 18 percent increase over 2015 numbers.

Distracted Drivers are on the Rise

Once upon a time the worst you had to worry about were people distracted by food, radio stations, children, and makeup applications. Today people are working on their laptops, reading on their iPads, talking on mobile phones, and doing countless other things behind the wheel that pose a risk to all on the road. This includes things like text messaging and surfing the Internet while driving – leading to more accidents and higher insurance costs for all drivers.

Technology is Driving Repair Costs Higher

We view all the new gadgets and computer-assisted safety features in modern vehicles as positive things. They’re designed to help safeguard drivers and prevent accidents. However, these cutting-edge technology items are also costly to repair and must be repaired or replaced once accidents occur. This, yet again, adds to the costs covered by insurance companies who have been reluctant to increase rates for the year.

Medical Costs are Increasing

Accidents with injuries can really send insurance payouts soaring. Because insurance companies tend to spread their risks between their huge pool of customers, an increase in medical expenses of, for example, five to six percent overall, leads to a corresponding increase in auto insurance rates for everyone.

The Number of American Drivers has Increased Dramatically

The increasing number of Americans on the road today is partly the result of lower fuel costs and partly related to higher rates of employment. This combination of bonuses has led to the large increase in a number of drivers in the past 25 years.

More Cars are on the Road Lead to Higher Rates

The year 2015 saw a record number of new vehicles on the road – to the tune of 17.5 million of these vehicles. More cars on already-congested roadways can only increase the risk of automobile accidents. That means more financial risks for the insurance companies, which results in higher rates for you.

What Can You Do to Offset Rising Insurance Rates?

It isn’t any one of these factors alone that have led to the massive increase in costs. It is the combination of all these things that has been the driving force behind these rate increases for your auto coverage. There are things you can do, as a consumer, though, to help offset some of these increases.

These are a few steps you might want to consider.

  • Compare rates from one insurance company to the next.
  • Look for insurance companies that offer discounts for safe driving records and being accident-free.
  • Consider doing business with companies that provide discounts to drivers who allow them to monitor their behavior behind the wheel.
  • Bundle policies with the same carrier.
  • Increase deductibles. Insurance companies appreciate drivers willing to share the risks by offering lower rates.

The decision to increase insurance rates for today’s drivers is not one the average insurance company takes lightly, but it is sometimes necessary in order for them to continue providing the valuable services they offer all drivers on the roads today.

For more information about car insurance, please contact us at info@icnj.com or 201-525-1100.