insurance

Why You're Paying More for Car Insurance Now

One big reason: Advanced safety features cost more to repair or replace.

Car insurance rates have been rising, even for people with spotless driving records, and they’re likely to continue to go up in 2018.

From 2012 to 2017, the consumer price index for auto insurance rose by 21.5%—the largest five-year increase in auto insurance costs since the early 1990s, says Ting Pen, of ValuePenguin.com, which analyzes financial data. During the same period, the overall CPI increased by 6.6%.

Premiums continue to rise because insurers are paying out more money in claims. Collision claims rose by 11% and comprehensive claims increased by 25% for the two years ending June 30, 2017—and that was before more than 250,000 insured cars were damaged by Hurricane Harvey flooding.

The biggest reason for the increase is the rising cost of repairing new safety features, such as sensors, cameras and computers. For example, it costs $2,818 to replace the bumper on a 2016 entry-level luxury car with a distance sensor, compared with $1,225 to replace the bumper on a 2014 model. Even replacing a windshield can be more expensive if a camera behind it needs to be recalibrated. “Rates follow costs, and costs have been rising,” says James Lynch, chief actuary for the Insurance Information Institute.

Distracted drivers have contributed to the rise in claims; a robust economy, which has led to an increase in drivers on the road, is a factor, too. Collision claims are also starting to rise in states that have legalized marijuana, Lynch says.

To lessen the pain of a rate hike, ask your insurer if you’re eligible for discounts you aren’t receiving. If you have low annual mileage and safe driving habits, you can save as much as 50% by participating in a data-tracking program, such as State Farm’s Drive Safe & Save, Progressive’s Snapshot, and Allstate’s Drivewise.

Shop around if you’ve had a life change, such as getting married or starting a new job. Tell your insurer before you switch—it may match the rate to keep you as a customer. Also, find out about insurance costs before buying a car. State Farm grades vehicles based on insurance rates. Go to www.statefarm.com and search for “vehicle insurance ratings.”

See Also: How to Get a Good Deal on Car Insurance

Most Popular

Tax Wrinkles for Work-at-Home Employees During COVID-19
taxes

Tax Wrinkles for Work-at-Home Employees During COVID-19

Are your home office expenses deductible? How does going out of state to work for a while affect your tax picture? There are some interesting wrinkles…
November 9, 2020
Retirement: It All Starts with a Budget
personal finance

Retirement: It All Starts with a Budget

When you’re meeting with your financial planner, do you talk about your budget? If not, you should.
November 10, 2020
Will Joe Biden Raise YOUR Taxes?
taxes

Will Joe Biden Raise YOUR Taxes?

During the campaign, Joe Biden promised that he would raise taxes for some people. Will you be one of them?
November 10, 2020

Recommended

Kiplinger’s Best Firms for Customer Service: Banks, Credit Cards and More
banking

Kiplinger’s Best Firms for Customer Service: Banks, Credit Cards and More

We crunched a lot of numbers (and ran a survey) to crown top firms for their service on banking, credit cards, mortgages, and home and auto insurance.…
October 22, 2020
How Much Insurance Should You Get? A Lawyer’s Advice
insurance

How Much Insurance Should You Get? A Lawyer’s Advice

The advice to “Only pay for what you need” sounds good. But when it comes to home, auto and business insurance coverage, four guidelines could help de…
October 12, 2020
7 Things Medicare Doesn’t Cover
Healthy Living on a Budget

7 Things Medicare Doesn’t Cover

Medicare Part A and Part B leave some pretty significant gaps in your health-care coverage. Here's a closer look at what isn't covered by Medicare.
October 1, 2020
Your Guide to Open Enrollment
health insurance

Your Guide to Open Enrollment

Your options may look a little different this fall. Meanwhile, the cost of coverage continues to climb.
October 1, 2020