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Why are auto insurance rates going up?

Posted on Apr 05, 2017 by: Scott West

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Two major factors are responsible for the recent rapid increase in auto insurance rates.




First: technology.
 Computers, sonar-activated braking, and backup assistance systems all add to the cost of a new vehicle. You might wonder, “If the cars are so much safer, shouldn’t the insurance cost go down?” Well, when a “smart” bumper is damaged, the repair bill now includes computers, cameras, and sensors. Twenty years ago, a bumper replacement might cost $1,200; today, it can cost $2,500 or more.

Second: distracted driving. People not only drive more often now, but they also use their phones more while driving. The frequency and severity of auto accidents has increased nationally. Texting, dialing a number, or otherwise not concentrating on the road leads to more and bigger crashes; in 2016, the insurance industry reported a record year for auto losses. Companies have to adapt their rates to these trends, and consumers end up paying more.

If you have any doubts about the prevalence of these factors, check out the other drivers next time you ride (not drive) in a car. I'll bet at least twenty percent of the drivers you see will be using their phone in some form or fashion. Even an occasional user of GPS maps has to take his eyes off the road (I’m guilty).

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