What’s behind auto insurance premium increases?

Sometimes the causes for increases are simple and can be easily anticipated based on common circumstances, while others may be unforeseen and are more complex.

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National trends affect insurance rates across all carriers and types of drivers

• Distracted driving leads to more claims — Texting and other forms of distracted driving increase the chances of a crash—and distracted driving is on the rise. This leads to an increase in claims made to insurers, making the cost to insure everyone higher.
• People are driving more — Low unemployment and low gas prices mean people are driving more, both for business and personal reasons. This equates to more accidents on the road.
• Repair costs are increasing — New technology in today’s vehicles is more complex, and more expensive to repair. For example, in 1990, a Honda Accord LX bumper had 10 parts. The 2015 model bumper has 22 different parts, including new sensors.
• The economy — Increases in legal and medical expenses affect how much insurers need to pay to ensure claims are handled properly.

Individual factors may affect how much you pay

• Type of vehicles — The type and year of your vehicle, engine size, safety ratings and risk of theft affect your premiums.
• Drivers covered — Because of lack of time behind the wheel, insuring a teen or less experienced driver adds to your risk and can increase your cost.
• Where you live and work — Population density, commuting miles and the average number and cost of claims in an area all have an impact on the chance that you’ll be involved in an accident.
• Your driving record and claims history — Receiving a speeding ticket or filing a claim may result in an increase in your rates, as your insurer may see them as an indication that you are at a greater risk of having a future accident.

There are ways to manage your cost

There are some coverages you’re required to have on your vehicle; however, as your needs change, regularly review your policy to make sure it still works for you.

• Choose a higher deductible to lower your premium – Increase your deductible, but keep in mind that while your monthly cost will be less, your out-of-pocket costs will increase if you file a claim.
• Look for discounts – Make sure you’re getting all of the discounts you qualify for – like multiline, multicar, safety features, good student, etc.