4 Current Trends Impacting Insurance Premiums
March 6, 2017
Car insurance. Does it seem like it’s a bigger drain on your wallet than before? It very well could be. Just look at these four trends that may be contributing to higher costs:
More new cars with more advanced features: Today’s drivers have a healthy appetite for new cars, and most of the vehicles are laden with technology. That makes them expensive to repair or replace after an accident. Americans bought 5.7 percent more new cars in 2015 than 2014, to the tune of 17.5 million vehicles sold, according to the 2016 Auto Industry Trends report from PricewaterouseCoopers.
More distractions: We have more distractions taking our eyes off the road than ever before, including both the vehicle’s technology and our own. Navigation systems, mobile phones, passengers and more are all distractions than can lead to devastating accidents. At least one in 10 traffic deaths involve a distracted driver, according to the National Highway Traffic Safety Administration (NHTSA).
More crowded roadways: Distracted driving is all the more dangerous given we are spending more time on the road. We’re driving more miles than we have in a while, partially due to lower gas prices. The Federal Highway Administration estimated that U.S. drivers logged 3.1 trillion miles in 2015. That’s the highest since 2007’s 3 trillion miles. Unfortunately in 2015, traffic fatalities also rose 7.2 percent from the year before. That was the biggest single-year increase since 1966, according to the NHTSA.
More expensive claims: Here’s an interesting tidbit: Claim frequency is on the decline. But, cost isn’t. That’s likely due to the rising severity of accidents and the increased cost of medical care. From 2005 to 2013, the frequency of bodily injury liability claims (someone hurt in an accident) decreased 14.5 percent, according to the Insurance Research Council. Yet, costs rose 31.2 percent during the same period. Cars repairs and medical services– they’re getting more expensive every day. And, with more miles being driven and more demands on our attention we will see an uptick accident frequency I predict.
It all feeds into the overall costs associated with your auto insurance rates. But, with the risk of costly accidents on the rise, this is certainly no time to try to save on insurance by reducing your coverage. If you’re concerned about your auto insurance rates, talk to your insurance professional about ways to lower your premiums without sacrificing your protection.