Auto Insurance


It’s no secret that auto insurance premiums are going up around the country. The U.S. Bureau of Labor Statistics found that car insurance rates rose more than 5% from March 2015 to March 2016 at a time when was inflation was negligible at less than 1%.

But the picture is darker than that for your wallet. According to the Insurance Information Institute (I.I.I.), a deeper and longer dive into the last two years of data found that premiums actually rose an average of 10% during that longer period.

The simple answer to why rates are going up so much has to do with Americans driving more in part due to lower gas prices. But there are actually more moving pieces to the explanation…

Read more: Bandit towing scams: The danger waiting on the side of the road!

3 reasons why you’re paying so much

The I.I.I. list the following as deeper factors behind the insurance hike:

  1. The improving job market not only means more Americans driving, it also means more accidents. In fact, the National Safety Council noted the largest year-over-year percent increase of accidents in 50 years when crash fatalities rose 8% from 2014 to 2015.
  2. Increased speed limits are a big culprit in the rise of insurance costs. Twelve states have raised their speed limits to 70 or 80 miles per hour over the past four years. Texas even has limits as high as 85 mph! Ohio, meanwhile, noted the instance of crashes skyrocketed by nearly 20% in the two years after they upped their speed limit.
  3. The average price an American pays for a new vehicle hovers somewhere in the low $30,000 range. More expensive rides require more coverage, and when there are accidents, medical costs, litigation costs and the cost of auto repair work continue to rise faster than prices overall.

 

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