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Why Auto Rate Insurance Rate Are Going Up

Increased Accident Rates Drive Up Auto Insurance Premiums

Car insurance rates have been steadily climbing over the past few years, and it’s not just inflation. The simple fact is that accident rates have gone up, and that means higher costs for companies – which they pass on to you, their customer.

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More people on the road means a higher chance of crashes. Over the last decade, the number of miles driven in the U.S. has increased significantly. With more vehicles traveling more miles, accident frequency has risen too. Insurers have to pay out more claims, and they offset those extra costs by raising your premiums.

Vehicle choices also factor in. If you drive an SUV or high-powered sports car, you’ll generally pay more than someone with a mid-size sedan. More expensive or high-performance vehicles cost more to insure because they tend to be involved in more costly accidents.

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More Expensive Vehicle Repairs Lead to Higher Claims

The cost of vehicle repairs has skyrocketed over the years, and your auto insurance company is passing those costs onto you.

More Expensive Parts

Vehicle parts, especially for new cars loaded with advanced technology, have become ridiculously pricey. A bumper for a luxury sedan can cost $3,000. High-tech sensors and cameras are several hundreds of dollars each. Labor rates have also gone up significantly. This all adds up to higher repair bills, which translate to higher insurance claims and ultimately higher premiums for you.

Increased Litigation

There are more auto accident-related lawsuits today, and higher payouts. This legal landscape means insurance companies have to charge more to offset litigation costs and still make a profit. Some of these additional fees are built into your premiums.

Medical Costs on the Rise

If people are injured in an accident, their medical bills are usually covered under the auto policy. Healthcare costs have skyrocketed, so if there are injuries, the claims paid out by insurance companies are substantially higher. They pass on some of these costs to customers through higher premiums.

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More Distracted Drivers

Unfortunately, distracted driving is becoming more common, leading to more frequent and severe accidents. Texting, phone calls, navigation systems, and other tech distractions cause thousands of crashes each year. Insurance companies see the claims and raise rates to account for these riskier drivers.

READ ALSO: Does Auto Insurance Follow The Car or The Person?

Rising Medical Costs Translate to Larger Injury Settlements

The cost of auto insurance rates has been steadily climbing over the years, and unfortunately, that trend doesn’t seem to be slowing down anytime soon. One of the major factors driving up premiums is the rising cost of medical care and personal injury claims.

Cost of Care Skyrockets

The cost of health care in the U.S. has dramatically increased over the past several decades. Things like hospital stays, surgeries, rehabilitation, and medication are astronomically expensive. When a car accident results in injuries, especially serious ones, the medical bills can easily reach hundreds of thousands of dollars per person. Auto insurers are on the hook for covering these costs, and they pass on these additional expenses to customers in the form of higher premiums.

More Litigation and Larger Settlements

Not only are the actual costs of treatment going up, but the amounts awarded for pain and suffering in injury lawsuits are also increasing. This is partially due to a more litigious society where people are quick to file a lawsuit in hopes of a big payout. Juries have also become more sympathetic in recent years, awarding higher damages for injuries. The auto insurance companies bear the brunt of these legal costs and settlements, which again get incorporated into the premiums of all customers.

Fewer Health Insurance Options

For those without health insurance, the responsibility of paying for accident-related medical care often falls on auto insurance policies. As health insurance plans become more expensive and fewer people have coverage, auto insurers pick up a larger portion of hospital bills. They have to offset these unforeseen costs by charging higher premiums for all customers, whether or not they have their own health insurance.

While no one wants to pay higher auto insurance rates, the fact is that increasing costs in health care and legal expenses have a direct impact on premiums. Understanding the “why” behind rate hikes may make them a bit more palatable, if not any less affordable. The best steps you can take are practicing safe driving, keeping a clean record, and shopping around for the best deal on coverage.

READ ALSO: Military and Veterans Auto Insurance: Your Guide to Discounts

Distracted Driving Boosts Accident Frequency

Distracted driving has become an epidemic, and it’s causing auto insurance rates to climb. According to studies, over 3,000 deaths and 400,000 injuries occur in the U.S. each year due to distracted driving. As accident frequency rises, insurance companies have to increase premiums to offset the higher costs.

Eyes on the Road

Using your phone while driving is dangerous and in many places illegal. Texting or browsing social media takes your eyes off the road for an average of 4.6 seconds enough time to travel the length of a football field at normal highway speeds. If you simply must check your phone, pull over and stop your vehicle in a safe area first. Your Instagram feed can wait.

Passengers and Other Distractions

Animated conversations with passengers in your vehicle can also divert your attention and increase your risk of an accident. Ask friends and family members to avoid distracting you while you’re operating the vehicle. Fiddling with the radio, eating or drinking, grooming yourself, and dealing with unruly kids in the backseat are other common diversions that make accidents more likely. Minimize distractions and stay focused on driving.

Drowsy Driving

Driving when you’re overly tired or fatigued impairs your reaction times and decision making abilities in much the same way as driving drunk or distracted. Getting adequate rest before driving and pulling over to rest if you feel very drowsy are two of the best ways to avoid drowsy driving and reduce your chance of an accident.

READ ALSO: Who Offers the Best Commercial Auto Insurance Coverage?

Here are some tips to keep your premiums low despite market trends.

1. Compare quotes from multiple companies

Don’t just renew with your current carrier every year. Compare quotes from at least three other companies to make sure you’re still getting the lowest rate. Prices can vary significantly between providers depending on their costs and profit margins. Check both national brands and local insurers for the widest range of options.

2. Increase your deductibles

If you’re willing to pay more out of pocket for claims, increasing your deductibles can lower your premiums. For example, raising your deductible from $500 to $1,000 can save you up to 25% on collision and comprehensive coverage. Just make sure you can afford the higher deductible if you do have an accident.

3. Drop unnecessary coverages

Look at your current policy and see if there are any coverages you can do without. Things like towing, rental car reimbursement or roadside assistance can usually be removed to save money. Also, if your vehicle is older, you may not need collision and comprehensive coverage. Dropping them can reduce your premiums significantly.

4. Bundle your auto with other policies

Most insurers offer discounts when you bundle multiple policies together, such as auto, home, life and boat insurance. Bundling can save you up to 25% off the total cost of all your policies. The more policies you bundle, the bigger the discount. Check with different companies to see who offers the biggest bundling discounts.

5. Maintain a good driving record

The biggest factor in your auto insurance rate is your driving record and claims history. Avoid traffic violations and accidents to keep your premium from spiking. Most insurers also offer safe driver discounts for those with a clean record. Drive safely to earn and keep these discounts.

Conclusion

Following these tips can help offset the steady rise in auto insurance costs and secure you the lowest premiums possible. Shop around, increase your deductibles, drop unnecessary coverage, bundle policies and drive safely to get the best deal on your car insurance.

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