People with good driving records rightfully expect to benefit by getting lower car insurance rates. And they expect insurance rates to go down as their car gets older. For the most part, car owners expect to be able to connect their insurance rates with factors they can see. Unfortunately, auto insurance rates rise for many reasons that are not related to a particular driver’s record or the age of the car.
Below is a list of some factors that affect your insurance rates in ways you may not expect.
1. Rising Cost of Repairs
“Vehicles have become more advanced, both in terms of safety and technology,” said Ben Guttman, an executive broker with North Central Insurance Agency in Baltimore, in an interview with U.S. News and World Report. This means there are more expensive parts to fix even in a small accident, and the cars are designed to protect the passengers even at the cost of being totaled.”
JoAnne Murray, president of Allan Block Insurance Agency in New York City, cites the rising cost of parts as a reason for rising insurance prices. “A side-view mirror can cost $1,000. Bumpers are more than $2,000. The days of a minor fender bender where the cost to repair was under $1,000 doesn’t exist. This drives up the rates,” she says.
2. Distracted Driving
“The main cause for rising costs is distracted driving,” Guttman says. “When you aren’t watching the road, it not only increases the likelihood of a wreck but also increases the severity. What would have been a small fender bender if you had hit the brakes a second earlier, now is a total loss.”
Cell phones have become ubiquitous, and car controls have become more complex. Climate and audio features now often involve a touch screen with several menus. Texting while driving or forgetting to set controls before pulling onto the road means that drivers look away from the road for longer periods, turning an avoidable danger or a small accident into a serious collision. Enough major accidents over time add up to high rates for everyone.
3. Your Credit
Your credit rating also affects your insurance rates in many states. Some estimates suggest that your insurance rate can increase as much as 27 percent if your credit score reduces from excellent to fair. If your credit score drops from excellent to poor, your insurance rates could double in cost.
4. Uninsured Drivers
In 2015, 13 percent of the drivers in the U.S. were uninsured. That means that one of every eight cars you pass today could be driven by someone who does not carry insurance on their vehicle. Processing claims involving uninsured drivers has become very expensive, increasing the cost of insurance too. Many car owners take out Uninsured Driver Coverage, which covers some costs if you’re in an accident, the other driver is at fault, and that driver doesn’t carry liability insurance.
5. Increases in State Speed Limits
Many states are raising their speed limits, which leads not only to more accidents, but to worse accidents with more significant damage, more severe injuries, and more fatalities. Rising medical costs also raise the price of covering injuries from an accident.
6. Extreme Weather
Extreme weather is becoming more common across the U.S., according to a 2017 report from Farmers Insurance. Everything from hail storms to flash floods are increasing and persisting past the winter months into April and May. Eventually, such patterns could increasingly affect insurance rates.
7. Changing Your Insurance Policy
Adding a new driver to your policy or changing the primary driver can raise your rate, as can removing a car from your policy or separating your home insurance from your car insurance. If your insurance policies are bundled, you may be getting discounts for multiple cars or multiple policies that you are not entirely aware of. Splitting the bundle can reduce or eliminate the discount.
Steps You Can Take to Improve Your Rates
There are some reasons for auto insurance increases that won’t change until most people change the way they drive. But there are steps you can take to improve your insurance rates.
- When you buy your next car, consider a car with simpler engineering, with more mechanical and fewer computer-controlled parts to maintain. Look at well-cared-for pre-owned cars that could give you a better rate because they are cheaper, to begin with, and have a shorter life expectancy.
- Just as separating an insurance bundle can raise your rates, bundling your homeowners or renters insurance with your car insurance and insuring all of your families’ cars with one company can save you as much as 25 percent in insurance costs.
- Do the math on raising your deductible. A higher deductible can mean a lower monthly rate. But keep the deductible to an amount you can afford and set that amount safely aside so that an accident or theft doesn’t leave you worse off than a higher payment.
- Talk to your insurance agent about your insurance plan. Different insurance plans have different structures with various fees, financing rates, or service charges. Changing your payment plan may lower the overall cost. If you have more than one car, you may not need rental coverage to rent a car if one of them is damaged. If you have AAA, you might opt out of roadside coverage.
- Continue all the auto safety checks, regular maintenance, and safe driving habits you already practice. They are not the only factors that affect your car insurance rates, but they do have an impact, and they keep you, your family, and other drivers safe.
Our team at Griffin Owens Insurance Group would be glad to talk to you about your car insurance and explore how you can save money while staying safe. Call us at 703-471-0050 or email us with any questions. We are here to help.
Distracted driving is dangerous and continues to kill and injure more people each year. According to the National Highway Traffic Safety Administration (NHTSA), as a result of distracted driving, 3,450 people were killed in 2016, and hundreds of thousands injured. These numbers continue to rise as technology becomes a larger part of our daily life.
Distracted driving is not a new issue; it includes anything that takes the drivers’ eyes off the road. And, seconds do matter. At 55 miles per hour, looking away from the road for 5 seconds has been compared to driving the length of a football field blindfolded. The introduction of smartphones, smart cars and texting has exponentially increased these dangers– and teenagers present the greatest risk.
The National Association of Insurance Commissioners (NAIC) calls it an epidemic and federal, state and local governments are paying attention. For example, Texas now requires new drivers over the age of 18 to take a distracted driver course, Virginia has the “DRIVE SMART” campaign aimed at improving safety, and the National Association of Insurance Commissioners (NAIC) launched a “Keep the Road Code” pledge and campaign. New devices on cars are also helping through new features including blind spot warning systems, lane change alerts, back up warning signals and assisted braking mechanisms.
Companies are stepping up as well. Distracted driving by employees is dangerous and a concern for businesses. Social responsibility, economic liability and public safety are encouraging internal rules and education in the corporate world.
With the knowledge that cellphone interactions while driving are up 57 percent over early studies, the insurance industry is helping to lead some of these initiatives, not only through education but targeted awareness campaigns. A recent study by car insurance search engine, The Zebra, confirmed that motorists ticketed for distracted driving could see their auto insurance premiums increase by an average of 16%, or roughly $226 a year. The study also found that premiums increased by 41% in one state when policyholders are charged with distracted driving violations. Social, criminal and financial implications will continue to grow as a result of distracted driving in our society.
We all need to work together to change these dangerous behaviors through meaningful legislation, targeted media campaigns, and education.
We know how important these issues are and we are trying to do our part. Throughout the year we work to educate Virginians about the dangers of taking their eyes and mind off the road. We discuss not only the risks of cell phone use but eating, drinking, grooming, reading and even tending to pets and children while driving.