Tag Archive for: auto premium

why auto insurance premiums are increasing

why auto insurance premiums are increasing

The past year has brought many new challenges to the insurance industry. The consistent rise of auto insurance premiums is impossible to ignore— but why are they rising? Here’s why auto insurance premiums are increasing.

distractions behind the wheel

The rise of technology brings a plethora of pros and cons to the insurance field. As reported by The Centers for Disease Control and Prevention (CDC), there are eight deaths a day due to a distracted driver.

They list the three main types of distraction as:

  • “Visual: taking your eyes off the road
  • Manual: taking your hands off the wheel
  • Cognitive: taking your mind off driving.”

The statistics have shown that distracted driving has increased with the influx of devices to be distracted by (think about the 17-inch screen that is now installed in Teslas).

The rise in distractions creates a greater financial risk for insurance companies, hence the rise in auto insurance premiums. Some insurance companies even have a “Distracted Driver Policy” because it has become so common.

The National Safety Council provides a PDF with a sample of a Distracted Driver Policy for reference.

drivers with little experience

The hiring market is unpredictable right now. According to The American Trucking Association, “without substantial action, by 2030 and at current trends, the driver shortage could grow to 160,000.”

What does this mean? Well, nearly “one million new drivers will need to be trained and hired in the next decade to keep pace with increasing consumer demand and an aging workforce.”

With the lack of drivers, there is a sense of desperation to find anyone to help transport supplies. In turn, this has resulted in a higher risk of accidents because of less experienced drivers handling large machinery and vehicles, and you guessed it, increased auto insurance premiums as a result.

repair costs

Insurance aside, most vehicles have become more expensive to maintain because inflation has affected many sectors in the auto industry. 

This is partially due to the rise in smart cars that are equipped with special technology and advanced parts that are expensive to replace and repair. The combination of technology advancements and the stress on chain distributors the past year has created the perfect storm. As a result, more control is given to car shops and manufacturers to raise prices on parts and labor. This includes a higher premium and insurance needed for more expensive auto installations and parts. 

injury costs

The rise in accidents has caused a rise in auto insurance premiums. CNN reports that last year around 38,680 persons died in car accidents – the highest number since 2007.

There are different types of car accidents, and not all of them are chargeable. Forbes lists a “chargeable accident” as a collision that causes damage to property (like another car or a fence) or causes injury or death.

Most reports and claims of a car accident that causes injury increase an insurance premium.

involved attorneys

The rise of claims has created a higher demand for attorneys involved in the vehicle accident sector. With the increase in specific claims, more people have representation.

Has your insurance broker asked for a copy of your contract recently? Don’t worry, they’re not being nosy! Your broker is just going the extra mile to understand the terms and scope of an agreement.

Learn more about why your broker needs a copy of your contract in order to issue a certificate on the benchmark commercial insurance blog.