Here's why your car insurance rates keep going up

Automobile crashes exact a high price when it comes to the loss of human life and injuries. Globally, nearly 1.3 million individuals are killed in crashes each year, which averages out to 3,287 deaths a day according to the Association for Safe International Road Travel. In the U.S., the NHTSA says that 33,561 people were killed in auto accidents in 2012, and 2.3 million were injured, although crash fatalities have steadily decreased since then.
The average auto liability claim for property damage was $3,073 in 2012, while the average bodily injury claim was $14,653, according to the Auto Injury Insurance Claims Study. The average collision claim ran $2,950, over $1,300 more than the average comprehensive claim at $1,585.
Car insurance is a mandatory risk management strategy for all drivers and how much you pay is determined by several factors. Carriers follow a number of guidelines when pricing a new policy. Data provider AudaExplore says these include what kind of car will be insured, how likely is it to be stolen or in an accident, what are the what the replacement or repair costs are likely to be if it is stolen or damaged, and whether or not the vehicle has specific features that make it safer.
In addition to these questions, there are other risk factors that can impact how much a driver pays for insurance. 
Financial issues
Gary Jennings of Strategic Claims Direction says that insurers look at whether or not a driver has let his or her auto insurance lapse, or has a poor credit score because those are predictors of risk (whether good or bad). Filing previous claims may also be a risk indicator and extends to homeowners and other insurance policies as well.
Driving habits
A driver who has been cited for speeding, moving violations, DUIs, or reckless driving can expect to pay more for insurance.
Jennings says frequent accidents, even minor ones, can impact liability coverage at renewal time, as will claims for severe accidents. Individuals who drive a high number of miles a year (usually over 2,000 a month) can expect to pay higher premiums because the risk of being involved in an accident is greater.
More drivers
Adding drivers to a policy, especially young teens, will increase premiums. The good news is that there are discounts for drivers identified as “good students” and some will last until the driver reaches the age of 25.
Location matters
Where a driver lives can impact their car insurance just like it does their homeowners insurance. Some geographic areas are inherently riskier because of traffic, road conditions, weather, crime and other factors, according to AudaExplore. The company and other data providers can provide underwriting and rating solutions that will help carriers monitor driving behavior, identify any undisclosed risks, and provide insight into the environment in which a vehicle is operated.
Jennings says that living in an area prone to weather-related events such as hail or tornadoes can impact premiums, as well as living in a low-lying area that sees frequent flooding. 
Car choice
Face it, the more expensive a car is to replace or repair will affect its premium rates. High performance luxury cars like those from Jaguar, Mercedes, Porsche, Corvette, Maserati or Ferrari will cost more to insure than a more conservative Honda minivan or a Ford Focus. Vehicles that are more expensive to repair, even in minor accidents, can raise premiums, explains Jennings.
 More likely to be stolen?
Selecting a vehicle that is more likely to be stolen is another factor affecting what you’ll pay for insurance. In 2013, the most frequently stolen vehicles were:
 
1. Honda Accord
2. Honda Civic
3. Chevrolet Pickups (full-size)
4. Ford Pickups (full-size)
5. Toyota Camry
6. Dodge Pickups (full-size)
7. Dodge Caravan
8. Jeep Grand Cherokee
9. Toyota Corolla
10. Nissan Altima
 

Tips for lowering premiums
Jennings says there are some practical ways for drivers to lower their premiums and it’s easier than most people might realize.
First, be honest about the number of drivers on the policy, the number of miles driven, and any other risk factors so the carrier knows up front which risks need to be managed.
Driving carefully, observing traffic rules and speed limits, avoiding moving violations and accidents will help tremendously. In the same vein, presenting a good “moral values” picture with a good credit score, no late payments and no criminal convictions will favorably impact rates.
Consider keeping your car longer since collision and comprehensive premiums may drop as vehicles age. If you have an older car, it might be possible to eliminate collision coverage if you’re willing to absorb that risk. If you belong to an automobile club, towing coverage may not be necessary as part of your car insurance.
Purchasing multiple policies – e.g., homeowners, life insurance and auto insurance – can earn a driver multi-policy discounts on insurance.
If there are teen drivers in the family, make sure they take an approved driving course and keep their grades up so they can apply for “good student” discounts.
And with the variety of insurers willing to provide quotes online, make sure to check the market for competitive rates just to make sure your insurer is providing the best possible rates for the coverage you need.

Posted 12:05 PM  View Comments

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