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
2005 $831.58 -1.3%
2006 $817.99 -1.6%
2007 $798.54 -2.4%
2008 $790.66 -1.0%
2009 $786.65 -0.5%
2010 $789.29 0.3%
2011 $795.00 0.7%
2012 $812.19 2.2%
2013 $838.49 3.2%
2014 $866.31 3.3%
Source: [NAIC](http://www.iii.org/fact-statistic/facts-statistics-auto-insurance)

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
Rank State Average expenditure
1
New Jersey $1,263.67
2 Michigan $1,227.36
3 New York $1,205.03
4 Louisiana $1,192.92
5 District of Columbia $1,192.45
6 Florida $1,140.84
7 Delaware $1,125.74
8 Rhode Island $1,106.08
9 Massachusetts $1,035.52
10 Connecticut $1,031.70
Least Expensive States
Rank State Average expenditure
1 Idaho $571.94
2 Iowa $585.71
3 South Dakota $601.33
4 Maine $606.90
5 North Dakota $630.24
6 Indiana $642.19
7 North Carolina $643.84
8 Wisconsin $646.48
9 Nebraska $662.83
10 Vermont $665.17
Source: [NAIC](http://www.iii.org/fact-statistic/facts-statistics-auto-insurance)

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:
Liability Insurance
Bodily Injury Property Damage
Year Claim Frequency Claim Severity Claim Frequency Claim Severity
2006 0.98 $12,907 3.40 $2,796
2007 0.90 $13,361 3.46 $2,847
2008 0.91 $14,067 3.42 $2,903
2009 0.89 $13,891 3.49 $2,869
2010 0.91 $14,406 3.53 $2,881
2011 0.92 $14,848 3.56 $2,958
2012 0.95 $14,690 3.50 $3,073
2013 0.95 $15,441 3.55 $3,231
2014 0.87 $16,640 3.66 $3,290
2015 0.91 $17,024 3.73 $3,493
Source: [NAIC](http://www.iii.org/fact-statistic/facts-statistics-auto-insurance)
Physical Damage Insurance
Collision Comprehensive
Year Claim Frequency Claim Severity (5) Claim Frequency Claim Severity (5)
2006 4.87 $3,194 2.40 $1,528
2007 5.20 $3,109 2.48 $1,524
2008 5.35 $3,005 2.57 $1,551
2009 5.48 $2,869 2.75 $1,389
2010 5.69 $2,778 2.62 $1,476
2011 5.75 $2,861 2.79 $1,490
2012 5.57 $2,950 2.62 $1,585
2013 5.71 $3,144 2.57 $1,621
2014 5.95 $3,161 2.80 $1,567
2015 6.05 $3,350 2.73 $1,671
Source: [NAIC](http://www.iii.org/fact-statistic/facts-statistics-auto-insurance)

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.

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