Have You Noticed Increasing Auto Insurance Rates?
Although, as independent agents, Kirby Insurance continually shops around leading
insurers for the most competitive auto insurance rates and discounts for
our clients, in the long-term rates only seem to move in one direction --
When that happens, clients understandably ask, "Why has my car insurance
rate increased?" We feel your pain and we share your pain as our own
commercial and personal rates usually rise at the same time.
Oftentimes, there's no single culprit behind the increase. More likely,
several factors are in play.
On average, over an extended period, rate increases have worked out at
around 4% a year, but this has risen to 6% or 7% during the past couple of
Sometimes, it's possible to reduce or hold down your rates by changing the
terms of your policy. We'll take a look at this in a moment. But first,
let's explore some of the more common reasons for an auto insurance price
Why Your Auto Insurance Rates are Increasing
It may seem hard to believe but many car insurance firms are losing money
on this side of the business.
It's that profit or loss equation that mainly pushes rates up. In 2017, the
auto insurance industry lost a record estimated $150 billion-plus.
So, the likelihood of rate increases this year and beyond comes as no
Here are the main reasons:
- Repair costs are increasing. Since car prices are continually moving
upwards, especially in the age of high-tech, electric and hybrid vehicles,
it costs more to repair them after a crash.
- Medical costs are also going up. In severe accidents, the average medical
bill is now more than $500,000 and some costs can top $1 million. We all
know that diagnostic services, treatment and medications cost more each
year -- and those costs inevitably are passed on to drivers. Across the
medical sector as a whole, treatment costs have increased by more than a
third during a five-year period.
- The drop in gas prices encourages more of us to drive when we might
otherwise stay or home or use public transport.
- The same applies because of increases in employment. The more people who
have jobs, the more they're out commuting on our already busy roads.
- With more cars on our roads, there are more accidents. Here in
Westminster and Baltimore we like to think of ourselves as cautious
drivers, and these days cars generally have more safety features. But
heavier traffic and the time pressures flowing from our busy lifestyles
make accidents more likely to happen.
Nationally, 22.2% of all households lodged an auto insurance claim in 2017,
compared with 20.5% three years previously. Road safety experts and
insurers expect that percentage to continue to rise.
- Other factors like cell phone use and driving distractions contribute to
the rise in claims. Although Maryland banned the use of cell phones while
driving in 2013, there's plenty of evidence that some drivers, especially
younger ones, are still using them. The National Highways Traffic and
Safety Administration says texting is mainly responsible for recent
increases in fatal crashes.
- Recent natural disasters have pushed up the number of cars lost or
severely damaged. Catastrophes in the shape of hurricanes, severe storms
and even major forest fires are all to blame. And even though we may not
have suffered many of these directly here in Md, insurers often spread at
least part of the costs of these types of claims across the whole of their
- Increase in the number of cars or their contents stolen in major urban
centers. A car is stolen about every 40 minutes in our state -- more than
the US national average. Remarkably, about half of all car thefts happen
when their drivers leave them running while they're on an errand. This
actually is illegal in Maryland, but busier lifestyles make it tempting to
do so. And in more than half of all property theft, the vehicles had been
How Can I Lower my Car Insurance Rate?
There are a number of actions you may be able to take to reduce your auto
insurance premium -- though there's usually a price to pay if and when you
have to make a claim.
First, as we said at the outset, good, independent agents like Kirby Insurance continuously monitor rates offered by leading insurers to make certain
clients get best value.
All insurers use multiple factors in calculating rates, things like: the
make and model of the car, typical repair costs, whether and where it is
garaged, and the age, experience and claims record of drivers.
Your agent should be able to explain these factors to you, so you can make
informed decisions about your car ownership.
Second, you may be entitled to discounts for factors such as low annual
mileage, vehicle engraving, successful completion of certain safe-driving
causes and multiple policies with the same insurer.
Third, you might be able to increase the amount of repair and other costs
you pay out of your own pocket before your insurance policy kicks in -- the
And fourth, you might be able to switch to a different type of car
insurance policy that covers fewer risks or even the minimum required by
state law. However, as we said, there could be a significant downside to
this type of change in the event that you're involved in an accident.
You should definitely discuss this with your agent before making any
decision to downsize your coverage.
Will Car Insurance Rates Ever Come Down?
Rapidly changing technology including the era of the driverless auto may
have long-term effects on accident rates but it's too early to say yet
whether they'll be significant or even whether they'll be positive.
In the near term, the best we can likely hope for is that more insurers
will reach a point where they can hold rates at current levels rather than
increase them. Sadly, that's not likely to be the case in 2018 -- so you
need to ensure you're working with a good agent who can secure the best
If you're in Westminster or Baltimore and not already one of our clients, Kirby Insurance could have the solution you're looking for. Contact us today for your free auto insurance quote 800-371-6439.