By: Megan Kossow
7 Reasons Insurance Rates Go up
It is no secret that insurance rates tend to go up almost every time your policy renews, but why do these rates go up?
Contrary to popular belief your insurance rate isn’t ONLY affected by what YOU do during your last policy term. Insurance carriers may need to make rate changes when you renew. These means they change the rate they are charging everyone in a specific area. Sometimes it’s a small adjustment for inflation, sometimes it’s larger and could be based on multiple factors. The entire auto industry is experiencing high loss trends which means carriers are paying out a lot more claims than they previously have. Due to this fact, the rates of your insurance tend to go up.
Let's dive into 7 specific reasons as to why insurance rates go up.
1. The U.S. set a new car sales record of just under 17.5 million vehicles in 2015, up 5.7 percent from the year before.1 Newer cars are more expensive to repair and replace partly because there’s so much more technology in vehicles today. They are no longer replacing bumper just a bumper, they're also replacing sensors and cameras along with it.
2. Due to lower gas prices and low unemployment rates, people are driving more! 3.148 trillion miles were driven in 2015. That’s a 3.5% increase over 2014—the largest annual increase in 25 years.2
3. 2015 accident frequency was on the rise this causing bodily injury liability to increase approximately 3%. Additionally, property damage liability increased 0.9% and Personal Injury Protection (PIP or no-fault claims) increased 6.6%.3
4. From the years 2000 trough 2014 traffic deaths decreased by 22%. Estimations for 2015 show a 7.7%increase over 2014.4
5. The average cost per paid bodily injury liability claim increased 32.1% from 2005 to 2013.5
6. Between 2005 and 2013, the average cost of PIP claims rose 38.2%.6
7. Distracted driving is a major contributor in rate increases. In 2014, 3,179 people were killed and 431,000 were injured as a result of distracted drivers.7
If your insurance has been affected by one of the 7 reasons listed above, don't lose hope! You can simply be diligent and quote yourself using our online rater. We compare 40 top insurance carriers and give you the best three rates that fit your specific needs. Don't just take our word for it, quote yourself and protect yourself from rate increases!
1 Strategy& Price WaterHouse Coopers, 2016 Auto Industry Trends
2 U.S. Department of Transportation’s Federal Highway Administration
3 Insurance Services Office Fast Track Data
4 National Highway Traffic Safety Administration
5 Insurance Research Council
6 Insurance Research Council