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Why Are Auto Insurance Rates Skyrocketing?

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As auto insurance premiums continue to skyrocket, many people are wondering why?

Auto insurance is a necessary expense for most drivers, but in recent years, many have noticed a significant increase in their premiums. This has left many drivers wondering, why has auto insurance gone up so much? In this article, we’ll explore the factors contributing to rising auto insurance rates and what you can do to mitigate the impact on your wallet.

The Cost of Claims

One of the main reasons for the increase in auto insurance rates is the rising cost of claims. As cars become more advanced and expensive to repair, the cost of claims has also increased. In addition, the number of accidents and claims has also risen, leading to higher payouts for insurance companies.

According to the National Highway Traffic Safety Administration, there were over 6.7 million car accidents in the United States in 2018, resulting in over 36,000 deaths. This is a 12% increase from 2011. With more accidents and higher costs to repair vehicles, insurance companies are forced to raise rates to cover their expenses.

Distracted Driving

One of the main contributors to the increase in accidents is distracted driving. With the rise of smartphones and other technology, drivers are more distracted than ever before. In fact, the National Safety Council estimates that cell phone use while driving leads to 1.6 million crashes each year.

In addition to cell phone use, other distractions such as eating, adjusting the radio, and even talking to passengers can also lead to accidents. As a result, insurance companies are seeing an increase in claims and are raising rates to cover the costs.

Escalating Costs

Another factor contributing to the rise in auto insurance rates is the escalating costs of medical care and vehicle repairs. As technology advances, so does the cost of repairing vehicles. In addition, medical costs have also risen, leading to higher payouts for insurance companies.

Advanced Vehicle Technology

Modern vehicles are equipped with advanced technology, such as backup cameras, lane departure warning systems, and collision avoidance systems. While these features can help prevent accidents, they also come with a hefty price tag. In the event of an accident, these systems can be expensive to repair or replace, leading to higher costs for insurance companies.

Rising Medical Costs

In addition to the cost of vehicle repairs, medical costs have also risen significantly in recent years. According to the Centers for Medicare and Medicaid Services, healthcare spending in the United States reached $3.6 trillion in 2018, a 4.6% increase from the previous year. This increase in medical costs also affects auto insurance rates, as insurance companies must cover the cost of medical treatment for injured drivers and passengers.

Fraud and Abuse

Unfortunately, fraud and abuse are also contributing factors to the rising cost of auto insurance. Insurance fraud can take many forms, from staged accidents to false injury claims. These fraudulent activities not only cost insurance companies money, but they also drive up rates for honest drivers.

Staged Accidents

Staged accidents are a common form of insurance fraud, where criminals intentionally cause accidents to collect insurance payouts. These accidents can be difficult to detect and can result in significant payouts for the fraudsters, leading to higher rates for all drivers.

False Injury Claims

Another form of insurance fraud is false injury claims. In some cases, individuals may exaggerate or even fake injuries to receive a larger payout from their insurance company. This type of fraud can be difficult to prove and can result in higher rates for all drivers.

What Can You Do?

While rising auto insurance rates may seem inevitable, there are steps you can take to mitigate the impact on your wallet.

Shop Around for the Best Rates

One of the best ways to save on auto insurance is to shop around for the best rates. Different insurance companies may offer different rates for the same coverage, so it’s important to compare quotes from multiple providers. You may be able to find a better deal by switching to a different insurance company.

Consider Bundling Your Policies

Many insurance companies offer discounts for bundling multiple policies, such as auto and home insurance. By bundling your policies, you may be able to save on your overall insurance costs.

Maintain a Good Driving Record

One of the most effective ways to keep your auto insurance rates low is to maintain a good driving record. By avoiding accidents and traffic violations, you can demonstrate to insurance companies that you are a low-risk driver, which can lead to lower rates.

Take Advantage of Discounts

Insurance companies offer a variety of discounts that can help lower your rates. These may include discounts for safe driving, good grades for students, and even discounts for certain professions. Be sure to ask your insurance provider about any potential discounts you may be eligible for.

In Conclusion

While rising auto insurance rates may seem daunting, understanding the factors contributing to these increases can help you make informed decisions about your coverage. By shopping around for the best rates, maintaining a good driving record, and taking advantage of discounts, you can help mitigate the impact of rising auto insurance rates on your wallet.

If you have any questions regarding auto, home and business insurance options, please contact us, we’re always glad to help.  The NY Insurance Hub serves Albany, Schenectady, Troy, Latham, Cohoes, Watervliet, Clifton Park, Saratoga Springs, surrounding Capital Region areas and all of New York State from NYC to Buffalo.

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