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Why do auto insurance premiums increase?

rising cost of auto insurance

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Insurance agencies like Railside Citrus answer lots of client questions every day. Lately, many of our clients are wondering why they keep seeing auto insurance premiums increase. Here are some of the questions we hear often:

increasing auto insurance premiums
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There are lots of reasons your auto insurance premiums increase. Whenever there are industry trends that cause increases in the number and cost of claims, insurance companies have to raise their rates to compensate.

Reasons Why Insurance Premiums Increase

Changing weather patterns

We have had a lot of bad weather in the last few years. In fact, according to this article from NBC5, Illinois has had more tornadoes so far in 2023 than any other state in the US. Tornadoes and other severe weather cause more tree limbs to fall on cars and more hail damage. Bad weather also causes more accidents. 

Cost of uninsured drivers

According to the Insurance Research Council, about one in eight drivers did not carry the required insurance coverage in 2019. As an insured driver, you bear the cost of that through uninsured motorist coverage. Fewer uninsured motorists can help lower uninsured motorist coverage rates. 

Many states are attempting to address this problem through VIN verification programs. Click here to learn more about Illinois’ program.

Traffic fatalities are on the rise

Sadly, more people are dying on our roadways. In 2021, traffic fatalities in the US rose 10.9% according to a study by the NHTSA. An increase in traffic fatalities can lead to an increase in the number of large, catastrophic claims paid out by insurers. That, in turn, can result in an auto insurance premium increase. You can learn more about this in our blog post on the topic.

Why do my insurance premiums increase even though my car is getting older?

It doesn’t make sense, does it? Well, it does when you realize that your insurance covers more than YOUR car. Plus, repair costs are going up, even for older cars.

Your auto insurance policy covers your car, but it also covers you and other drivers. The liability portion of your premium covers medical bills if you injure others while driving. When medical costs go up, liability coverage costs have to go up, too. Plus, your liability coverage kicks in for damage you cause to other people’s cars. So, even if your car is older, other people’s newer cars cost more to repair.

Speaking of repairs, the cost to fix a damaged car has skyrocketed. According to ABC News, the cost of auto repairs has increased 23% compared to last year! Labor shortages, supply chain issues and general inflation all play a part. The result: even your older car costs more to fix than it did last year – and possibly more that it did when it was new! Insurance premiums increase when costs increase.

Another thing to consider is the impact of longer repair times. Because of labor shortages and supply chain issues, consumers have to rely on rental cars more often and for longer periods of time. Add that to steep climbs in car rental prices, and. you have another reason why car insurance premiums increase.

Technology makes new cars more expensive.

Consumer demand for technology in cars makes them more expensive to manufacture and repair. Infotainment components like bluetooth, large touch screens and charging ports cost a lot of money. Other higher-end features like heated seats, remote start and self-driving/parking technology are driving up costs, too.

We all want safe cars, but they come at a cost. Whether required or desired, things like air bags, back up cameras, GPS and lane departure sensors drive up costs for manufacture and for repairs.

What You Can Do

Here are a few things you can do to minimize your auto insurance premium increase.

Call an independent insurance agent, like us.

Independent insurance agencies like Railside Citrus work with multiple providers. That means we can shop all our affiliated providers to find a way to keep your insurance premium’s increase to a minimum. And we don’t even charge a separate fee for this service! 

Participate in a telematics program.

Many auto insurers offer telematics programs that reward you for good driving behavior. These programs monitor how and how much you drive over a period of time. You earn discounts on your premiums based on the results. In fact, many insurers offer discounts just for participating. A few providers include phone apps that will suggest driving habit changes that can save you money.

Do your research.

Are you looking for a new car? Some cars are less expensive to insure than others. Check with us BEFORE you buy! If you can send a link to the dealer’s website for a car you’re considering, we can get a price for insuring that exact car.

Discounts reduce your insurance premium’s increase.

You can reduce your car insurance premiums by taking advantage of every discount available to you.

  • Work with us to bundle your auto and homeowners policies with one company. You’ll get discounts on both policies!
  • If you have a young driver on your policy, a good student discount can be significant.
  • Enrolling in paperless statements and automatic payments often results in discounts.

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