Why Car Insurance Premiums Have Increased More Than Other Insurance Premiums in the Past 10 Years
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Car insurance companies cover your car in the hopes you do not have an accident. As long as this remains the case, the company makes a profit off of the premiums you pay. When determining that premium, car companies take into account a variety of factors, such as your age, where you live, your driving record, and how much you drive. This lets them know your risk factor and how much to charge to cover the risks involved.
Recently, though, car insurance premiums have seen an increase of 17% since 2009, according to ZeroHedge. The following sections detail what caused this increase.
Average expenditures for car insurance
After seeing a decrease in car insurance premiums during the mid- to late-2000s, car owners started to pay an increasing amount starting in 2010. While minimal at first, the amount paid per year has increased every year since 2009.
The following National Association of Insurance Commissioners (NAIC) chart shows the percent change in average car insurance expenditures by year between 2005 and 2014:
|Average Car Insurance Expenditures Year-After-Year|
|Year||Average expenditure||Percent change|
Top 10 most and least expensive states for car insurance per year
The amount of your car insurance premiums depend in part on where you live. The following charts show the 10 most and least expensive states when it comes to car insurance premiums, according to the NAIC:
|Most Expensive States|
|5||District of Columbia||$1,192.45|
|Least Expensive States|
Private passenger car insurance losses
In addition to driving more, Americans also file more claims to account for the increased number of accidents that result from the increased number of cars on the road. The following chart form the NAIC shows the percentage increase in the amount of claims from 2006 to 2015 for liability, comprehensive, and collision coverage claims:
|Bodily Injury||Property Damage|
|Year||Claim Frequency||Claim Severity||Claim Frequency||Claim Severity|
|Physical Damage Insurance|
|Year||Claim Frequency||Claim Severity (5)||Claim Frequency||Claim Severity (5)|
What is driving the rise in car insurance premiums?
More new cars on the road, cheaper gas, and an increase in claims represent the biggest reasons for the rise in car insurance premiums. Cheaper gas means that people can afford to drive further, meaning more cars spending more time on the road, increasing the possibility of more accidents. And more claims means that the car insurance companies have to recoup that cost through higher premiums for everybody.
In addition, with the economy rebounding from the Great Recession, more people can afford newer cars, meaning insurers have to adjust for the increased value of the cars they do cover. And while improved safety features on vehicles have helped keep costs down, a new car requires all of the required additional car insurance, such as comprehensive and collision coverage.