After several years of
fairly heavy increases, auto insurance rates look to have started to
flatten, with a much lower rate of increase predicted by the Insurance
Information Institute (III). The III also says that some consumers may
begin to see their rates drop, especially good drivers with clean
records. The III expects the average cost of auto insurance to rise by
only 3.5%, as compared to the nearly 8% increase. The reduced rate of
increase is due to the declining number of accidents (due both to
better drivers and safer cars), an increased crackdown on fraud and
abuse, and improved insurer financial performance.
What does this mean for consumers? If you have noticed that
your auto insurance rates are still increasing with each renewal, or
even have not gone down even though you have a great driving record,
this lower pricing trend makes it more important then ever that you
shop around for auto insurance. Why not take advantage of current low
prices? Many auto insurance consumers are becoming educated on other
companies, plans, and rates that are available to them; ones that could
afford them significant savings on their auto insurance.
A number of factors can affect the cost of your automobile insurance.
Age, make and model of car, driving record, purpose the car serves,
where you keep and drive your car, and your credit rating all affect
insurance rates. Auto insurance rates are affected by a number of
factors, including: Where you live – From one area to another, the
frequency of events such as theft or vandalism, and the costs of auto
repairs and medical bills can vary. For example, insuring an auto in
New York, New York, may cost twice as much as insuring an auto in
Jackson Hole, Wyoming.
Make and model of your auto – autos that are stolen less, harder to
damage, or cheaper to repair cost less to insure. Driving record –
Tickets, accidents, and previous claims may raise your rates. Age –
Because younger/less experienced drivers are involved in accidents more
often, their rates are naturally higher. How the auto is used – Whether
you use your auto for business, commuting, or pleasure can affect your
rates.
Talk to one of our representatives to find out how you can lower your
premiums. Things that often contribute to lower auto insurance rates
include:
- Driver training
- Good students
- Car pool use
- Students away at school
- Two or more autos
- Defensive Driver training courses for older drivers
- Higher deductibles
- Alarm systems
- Anti-lock brakes
How are auto insurance rates determined? Insurance companies use
statistical history to determine current rates. Rates are based on the
amount needed to pay all claims and company business expenses. Why do
insurance rates vary so much? You might think that your auto insurance
rate would be pretty much the same no matter which company you choose.
But your auto insurance rates can vary widely - even hundreds of
dollars -- primarily because of:
Varying claims experience - Auto insurance is priced to cover the costs
of accidents that may happen in the future. Of course, companies cannot
see into the future, so to do this, they use information about their
past claims experience. Since each company has had different claims
experiences with the groups of people they insure, the rates charged
customers by different companies vary.
Varying costs of doing business - Each company's cost of doing business
(how much they pay to sell and service policies), along with their
financial goals, is different, resulting in different prices being
charged to consumers.
Auto insurance companies price policies to cover the amount they'll need to cover:
- Accidents that have occurred;
- Claims salaries, building leases, and other claims-related costs; and
- Non-claims expenses such as customer service salaries, advertising and the price
of selling policies.
