We, at Frisco Insurance, keep you informed on important developments in the insurance space. Many folks across the United States have noticed that auto insurance rates have risen sharply in the last year. We’ll highlight several reasons why this is happening.
Let’s start by listing five major reasons:
- Auto accident fatalities have increased due to more prevalent “distracted driving.”
- The National Safety Council estimates that 25% of crashes involved cell phone use.
- Chip shortages decreased the inventory of new cars. This has caused used car prices to increase by over 30%.
- Medical costs are escalating rapidly in the United States. Over the last decade, bodily injury claim costs rose by a whopping 42%.
- Customers started driving faster and more aggressively when roads were empty during the height of the COVID-19 pandemic. This driving behavior continued even after normal traffic volume returned — causing a higher number of serious accidents.
Let’s look further into this important matter…
Why Are Auto Insurance Costs Escalating Rapidly?
Here’s a statistic from cnbc.com:
Auto insurance rates are rising at the fastest rate in almost 13 years.
That’s certainly a piece of noteworthy data for our customers who may be paying more attention to their monthly budget.
Let’s also look at some numbers from today.com.
Here are recent auto insurance price increases in three major states:
- California: 7% increase
- Florida: 10% increase
- Georgia: 25% increase
We can see that the rate hikes are corroborated by different sources but the real question is why?
Gas prices have dropped more than 45% since 2012 and more drivers are on the road. With more drivers on the road, more accidents occur and that raises premiums across the board. As we mentioned before, medical costs are rising fast, so if someone is injured in an auto accident, there’s more reason than ever before to have car insurance that covers medical expenses. Without a comprehensive insurance policy that covers bodily harm, it’s possible to completely wipe out diligently accumulated savings.
According to the Insurance Research Council:
From 2005 to 2013, the average cost per paid bodily injury claim increased 32% from $11,738 to $15,506. Insurance companies have no other recourse but to raise rates for their customers in this changing environment.
Here’s another piece of data from insure.com. They list four states where the average cost of automobile insurance has already jumped more than 10% recently:
- West Virginia
Please remember that you can always call Frisco Insurance to find ways to save money on your auto insurance. Clearly, this has a renewed importance for many of our customers… particularly in Georgia where the price increase is especially dramatic:
In the state of Georgia, Allstate issued an average 25% rate hike due to traffic fatalities increasing by a surprising 21% in 2015. Furthermore, the number of Georgia drivers on the road is now above the national average by a significant margin.
When you evaluate all of this data, you gain a clearer picture of why auto insurance rates are rising sharply this year and why so many publications are talking about it. However, there are always steps you can take to mitigate these price increases and to enhance your safety level when driving.
Safety First for Our Customers
How can you drive more safely on the highway given this new information? After all, your safety is the number one priority when you’re operating any motor vehicle. Please make sure you have a comprehensive and up-to-date insurance policy to protect you and your loved ones.
Here are two powerful reminders about auto safety:
- Always wear your seat belt.
- Do not look at your phone while driving.
Did you know that according to the United States Department of Transportation…
Seat belt use in passenger vehicles saved an estimated 14,955 lives in 2017.
We, at Frisco Insurance, cannot overstate the importance of wearing your safety belt. The increase in bodily protection, in the event of an accident, is staggering even at 30 mph!
Furthermore, the use of cell phones while driving has increased recently. Please remember that if you’re driving at a speed of 60 miles per hour, you will travel 88 feet in one single second of looking away from the road! That’s almost a third of a United States football field in one second.
Frisco Insurance is here to answer any important questions about your auto insurance premiums and precisely what is in your policy. We’re also happy to give you options on how to reduce the cost of your valuable automobile insurance and still have the proper coverage for your situation.