Here’s Why Your Auto Insurance Rates May Be Going Up (Even Though You Haven’t Had a Claim)

Posted by Carrie Babij on

Auto insurance rates are trending up across the industry and why you may be impacted even though you haven’t had any claims. Here’s how.

Here’s my grandson Maddox, a young driver exhibiting bad behavior as he talks on his cellphone while at the wheel of his high performance vehicle.

Your auto rates are determined by your driving profile, your driving history, your carrier and industry trends. Industry trends affect rates because insurance pools risk… in other words, if somebody has an $80k claim, the carrier can’t charge that individual $80k next year. So if there are lots of big claims, rates go up across the industry.

Why are there more claims and higher rates across the industry? Six reasons:

  1. The US set a new car sales record of 17.5mm cars in 2015. New cars have advanced technology that is more expensive to repair.
  2. Partly due to lower gas prices, 3.2 trillion miles were driven in 2015…that’s a 3.5% increase over 2014 and the largest increase in 25 years.
  3. 2015 accident frequency has increased: bodily injury up 3%, property damage up 1% and no fault claims up 7%.
    Traffic deaths are up 8% between 2014 and 2015.
  4. From 2005 to 2013, the average cost per bodily injury liability claim increased 32%.
  5. In 2014, 3,179 people were killed and 431,000 were injured as a result of distracted drivers. Younger drivers tend to be more easily distracted.
  6. In simple terms, there are more accidents and lawsuits involving nicer cars as more people are distracted by cellphones and we’re all paying for it.
And here’s Maddox checking out a text message from his girlfriend… he’s obviously completely distracted and should not be driving his car!

What can you do about it?

  1. Keep yourself safe… it’s an inconvenient truth that cellphones are causing accidents.
  2. As your agent, I stay on top of what various carriers are charging for what type of coverage. I will recommend a carrier change to you if I believe it’s in your interest. Unfortunately, none of the six items above are carrier-specific… they impact all carriers.
  3. If you experience a rate increase that is particularly painful on your budget we might be able to modify some of your coverages… a higher deductible for example. Give me a call if you want to discuss tradeoffs… unfortunately there is no free lunch.
  4. As your agent, of course I don’t want to see you go “shop” for cheaper insurance on your own. But if you do, please be very careful. Virtually all “big saves” are due to stripping down coverage or quality, many times in ways that aren’t obvious to the insured.

This site is informational and not a substitute for professional advice. Insurance coverage is subject to the language of the policies as issued.