Why are your Car Insurance Rates going up ?
The new reality of car insurance rates is that they are on the rise.
Why is this so ? There are a number of forces at work here:
1 There is a huge number of newer and more expensive cars on the road today. Of the estimated 253 million cars on the road in America A record 17.5 million were new cars sold in 2015 . The average cost of a new car in 2015 was $33,560. Up 2.6% from 2014. 2016 and 2017 stats are not out yet but we know the prices are not coming down ! When a new car is totaled in an accident most companies will pay to replace with another new car. Not cheap.
2 With gas prices at less than $2 per gallon people are driving more than ever. Americans logged 3.5% more miles in 2015 compared to 2014. That’s an estimated 4 trillion miles driven daily in America according the Bureau of Transportation Statistics. The Dept. of Transportation predicts this trend to continue over the next 30 years with an expected 23% to 27% increase in miles driven. The average driver spends 55 minutes per day behind the wheel. That’s a lot of windshield time..
3 Drivers are distracted more than ever with over half of those surveyed admitting to driving while using a mobile device. The National Highway Transportation Safety Administration states that; distracted driving is the number one cause of accidents and a “deadly epidemic.” There are over 6 billion mobile phone users in America and a quarter billion vehicles interacting daily on the road. That’s a lot of distracted driving. There are 9 people per day killed in a distracted driving accident.
4 Car Repairs are more expensive with all of the new technological devices our cars are equipped with. Just the cost of a mid sized sedans rear bumper has gone up 42% over the last 10 years ! Now factor in back up camera’s , car sensors , lane change sensors and more and you can see why repair costs have skyrocketed.
5 The cost of medical care is going up and up. People injured in accidents are incurring far greater costs for the medical attention they need. We had 6 million accidents last year with Over 2 million people sustaining permanent injury and over 41,000 people killed in auto accidents.
So there you have it. 253 million cars on the road, trillions of miles being logged, 40% or so of us are distracted , we have 6 million accidents per year, the repair bills are higher, millions of injuries and rising medical costs. Is it any wonder our insurance rates are going up ?
The auto insurance industry is facing a veritable sunami. They have to raise their rates to keep up with these rising costs. Paying for accidents is the main expense for auto insurance companies. But its certainly not the only one. They have overhead for payroll, operations, facilities, taxes and more.
It’s the current state of affairs in auto insurance. And we, the consumer are going to have to ante up to pay for the new “drive style”.
Next I will address the things you can do to be safe on the road and how to keep your auto insurance rates in check.