If you are a car owner, you may have noticed that your automobile insurance rates have gone up in recent years. You may be wondering why this is happening and what you can do to lower your premiums. In this article, we will explain some of the factors that affect automobile insurance rates and some tips on how to save money on your policy.
Factors That Affect Automobile Insurance Rates
There are many factors that influence how much you pay for your automobile insurance. Some of them are related to your personal situation, such as your driving record, your credit score, your age, your gender, your marital status, your vehicle type, and your location. These factors reflect your risk level as a driver and a customer. The higher your risk level, the higher your premium.
However, there are also some factors that are beyond your control, such as the market conditions, the industry trends, and the external events that affect the cost and frequency of claims. Here are some of the notable ones:
Weather-related risk: One of the factors that drive up automobile insurance rates is the risk of weather-related damage or accidents. Extreme weather events, such as hurricanes, tornadoes, hailstorms, wildfires, and floods, can cause severe damage to vehicles and properties, resulting in costly claims for insurers. As climate change worsens, these events are expected to become more frequent and intense, increasing the exposure and vulnerability of drivers and insurers.
Increased claim frequency and severity: Another factor that affects automobile insurance rates is how often and how much drivers file claims for damages or losses. The more claims insurers have to pay out, the more they have to charge their customers to cover their expenses and maintain their profitability. According to the National Association of Insurance Commissioners (NAIC), the average claim frequency for private passenger auto insurance increased by 6.4% from 2019 to 20203, while the average claim severity increased by 10.8%4. Some of the reasons for this increase are:
More drivers on the road: As driving activity recovers from the pandemic-induced slump in 2020, there are more cars on the road, which means more chances of collisions and accidents. According to the Federal Highway Administration (FHWA), vehicle miles traveled in the U.S. increased by 13.2%.
More distracted driving: As drivers rely more on smartphones and other devices for navigation, entertainment, or communication, they are more likely to take their eyes off the road and cause crashes. According to the National Highway Traffic Safety Administration (NHTSA), distracted driving was involved in 8.5% of fatal crashes.
More expensive vehicles and repairs: As vehicles become more advanced and sophisticated, they also become more expensive to buy and repair. New technologies, such as sensors, cameras, radars, and computers, can improve safety and performance, but they can also increase the complexity and cost of repairs if they are damaged. According to Kelley Blue Book (KBB), the average transaction price for new vehicles in the U.S. was $41,263 is now up 10%. According to CarMD, the average cost of vehicle repairs in the U.S. is up 3.4% from prior years.
Auto theft surge: Another factor that impacts automobile insurance rates is the surge in auto theft across the country. Auto theft can result in losses for both drivers and insurers, as well as higher premiums for everyone. According to the FBI, auto thefts in the U.S. increased by 9.2%. Some of the reasons for this surge are:
More opportunities for thieves: As many drivers left their vehicles parked or unattended during the pandemic lockdowns, thieves had more chances to break into or steal them. According to a survey by CoPilot, 35% of car owners reported leaving their car unlocked during the pandemic.
More demand for parts: As supply chain disruptions caused by the pandemic affected the availability and price of new vehicles and parts, thieves had more incentives to steal cars and sell them for parts. According to the National Insurance Crime Bureau (NICB), the most commonly stolen vehicles were the 2000 Honda Civic, the 1997 Honda Accord, and the 2006 Ford Pickup, which are older models that have high demand for parts.
More use of technology: As thieves use more sophisticated tools and techniques to bypass security systems and unlock or start vehicles, such as keyless entry devices, relay attacks, or hacking, drivers and insurers face more challenges in preventing and recovering stolen cars. According to the NICB, 56% of stolen vehicles had the keys or fobs left inside.
Tips on How to Decrease Premiums
While some of the factors that affect automobile insurance rates are out of your control, there are some things you can do to lower your premiums and save money on your policy. Here are some tips:
Shop around: One of the best ways to lower your automobile insurance premium is to shop around and compare quotes from different insurers. You may find that some insurers offer lower rates than others for the same coverage and features. You can contact an independent agent who can help you find the best deal for your needs.
Bundle your policies: Another way to lower your automobile insurance premium is to bundle your policies with the same insurer. By combining your automobile insurance with your homeowners insurance or other types of insurance, you can get a discount of up to 25% on your premium. This can also simplify your billing and claims process and reduce the hassle of dealing with multiple insurers. For instant quote, copy and paste this link in your website browser https://www.ourbranch.com/s/partner/jjc-agency-llc
Increase your deductible: Another way to lower your automobile insurance premium is to increase your deductible, which is the amount you pay out of pocket before your insurer pays for a claim. However, you should only do this if you can afford to pay a higher amount in case of a claim. You should also avoid filing small claims that are lower than or close to your deductible amount because they can raise your premium or affect your eligibility for coverage.
Improve your driving record: Another way to lower your automobile insurance premium is to improve your driving record and avoid tickets and accidents that could hike up your premium prices. You can do this by practicing safe and defensive driving habits, following the traffic rules and speed limits, avoiding distractions such as texting or talking on the phone while driving, and maintaining a safe distance from other vehicles.
Improve your credit score: Another way to lower your automobile insurance premium is to improve your credit score, which is a measure of your financial responsibility and trustworthiness. Many insurers use credit-based insurance scores to determine how likely you are to file a claim or pay your premiums on time. The higher your credit score, the lower your premium. You can improve your credit score by paying your bills on time, keeping your credit card balances low, checking your credit reports for errors, and avoiding applying for new credit frequently.
Ask for discounts: Another way to lower your automobile insurance premium is to ask for discounts that you may be eligible for. Some of the common discounts that insurers offer are:
Loyalty discount: If you have been with the same insurer for a long time, you may get a discount for renewing your policy or staying claim-free.
Multi-policy discount: If you have more than one policy with the same insurer, such as auto and home insurance, you may get a discount for bundling them together.
Good student discount: If you are a student under 25 years old with good grades, you may get a discount for maintaining a high GPA.
Low-mileage discount: If you drive less than the average driver, you may get a discount for reducing your exposure to accidents.
Safe vehicle discount: If you have a vehicle with safety features, such as airbags, anti-lock brakes, anti-theft devices, etc., you may get a discount for lowering your risk of damage or theft.
Telematics discount: If you agree to install a device or use an app that tracks your driving behavior,
For instant quote, copy and paste this link in your website browser https://www.ourbranch.com/s/partner/jjc-agency-llc
Commentaires