Why are Auto Insurance Rates Rising?
Inflation will cause the price of all insurance policies to rise slowly, but you may have noticed that your auto insurance has risen more than normal lately?
More Drivers Lead to More Accidents
Thanks to low gasoline prices and rising employment rates, more Americans can afford to drive. However, more vehicles on the road have led to more accidents that must be paid for by insurance carriers, and many carriers have transferred this cost to policyholders by raising premiums.
The number of accidents has risen because of an increase in unsafe driving practices. According to the AAA Foundation for Traffic Safety, about 87% of drivers admitted to engaging in at least one risky behavior while behind the wheel, including using their phones and not wearing seat belts.
The number of accidents isn’t the only factor affecting auto insurance claims. The size of the average insurance claim has increased as well. The three largest drivers of claim severity include the increase in the costs of medical care, auto repairs, and auto parts. According to a recent study, the largest repair cost comes from replacing the expensive technology that’s common in newer vehicles.
Auto insurance is required in most states to cover your own liability and provide compensation to others if you are responsible for an accident. Despite this, approximately 13% of drivers drive uninsured.
Unfortunately, it’s the drivers who follow required insurance laws who end up paying the price in the form of uninsured motorist coverage.
Although autonomous vehicles that can drive themselves have the potential to save lives and reduce injuries, they could also decrease the personal automobile insurance sector to less than 40% of its current size. While this change should be gradual, many insurance carriers have been slowly increasing their rates in anticipation of the shrinking market.
Insurance is meant to protect you in the event of an accident, but many criminals try to illegally use insurance policies for their personal gain. Most fraud schemes involve a policyholder faking an injury and blaming a third party or conspiring to cause an accident that can be blamed on someone else.
How Can Borden Perlman Help?
With insurance premiums on the rise for the foreseeable future, it’s more important than ever to be aware of the steps you can take to save on your premiums. Contact us to discuss your options for saving on your auto policy.