Like it or not, car owners will be seeing their insurance rates rise again in 2018. Most people believe their rates will rise significantly only when they get in an accident or change their policy. But rates have been rising across the board, independent of factors like good driving records and lack of claims. So what’s really causing the rise in rates?
Insurance companies are finding it more difficult to make a profit. Even the top five insurance companies in America are having trouble making money. Why? In part, because accidents have become more costly over time. Fatal accidents can cost an insurance company millions in payouts, which may barely be covered by premiums. The rising cost of medical services only adds to this dilemma.
The climate change has also played a part in the rising cost of insurance overall. Weather-related losses are on the rise, and are likely to get worse before they get better. While catastrophic storms and inclement weather might seem primarily a homeowner’s problem, bad weather means more chance of an auto accident, which means more claims… which leads to higher premiums. But insurance companies are currently paying out billions in weather-related claims, with no end in sight.
Dwindling investment profits are another factor that has nothing to do with insurance holders. Insurance companies make money by investing the money they get from premiums into stock portfolios. When that money isn’t being spent on claims, it’s generating revenue from the company. But financial crises and stock market losses can take a heavy toll on those investment gains. Insurance companies have taken major hits, sometimes losing billions. Insurance companies end up hiking premiums to make up for the loss.
Big data has also played a (sometimes unfortunate) role in whether or not your insurance rates rise. Many insurance companies are collecting more data than ever on their drivers, and can use factors such as age, education, credit rating, and marital status to determine their premiums. Many consider the ethics of this practice questionable and are working to impose regulations to stop it.
In the meantime, what can car owners do to help keep their auto insurance rates low? Unfortunately, many of the factors having nothing to do with your performance will remain out of your control. But there are steps you can take.
- Update your credit score. Most states take credit into account when determining premiums. If you can improve your credit, you can often improve your rate with it.
- Keep Your Insurer Updated. Life changes can also mean changes to your insurance rates. If you’ve moved, gotten a new job, or seen significant changes to your life circumstances recently, check with your insurance company and see if it makes a difference.
- Consider a bundle policy. Some insurers will offer a discount if you combine policies, such as an auto and home policy. If your insurer doesn’t offer bundle policy, you might consider…
- Shop for a new insurer. Don’t be afraid to look around for a better price or a better policy by comparing auto insurance quotes.
Many insurance companies chalk up the rising cost of premiums to texting while driving and failure of drivers to buckle their seat belts. So while some factors may continue to be out of the control of car owners, it still pays to be safe on the road.