Why has my Automobile Insurance premium increased?

If you have received your recent automobile renewal, you may have noticed that the cost for your auto insurance seems to be on the rise? You’re not alone. It doesn’t matter where you live, what you drive or who you are, nationally we are seeing rates increase by 30.9% over just the last few years. But you didn’t have a claim and why did your premium go up? Let’s answer that question right now.

First, let’s tackle a few reasons for perspective. Some of them may actually surprise you.

Reason No. 1: Inflation has been going berserk.

You knew this was coming, so we might as well address it right off the bat. Inflation has not only been at a record high recently, it has been increasing at record levels year over year for almost five years. The result is everything is costing more money, and everything includes the cost to insure drivers and their cars.

Reason No. 2: Technology in vehicles.

This is a frustrating one to be sure. Technology, while it can certainly make our cars safer to drive, comes with a cost, literally. Whereas cars used to be, well, just cars, today they are a combination of car, computer, sensors, cameras, transmitters and, yes, even artificial intelligence. Guess what? Those items not only are expensive to buy, they require trained professionals to properly install. More money on parts, and more money to install those fancy-shmancy parts.

Reason No. 3: Increases in frequency and severity of claims.

More people are getting involved in auto accidents, and each auto accident is costing more money than it previously did. After the COVID-19 pandemic, there was a drastic uptick in how many people were having accidents and what they did after that accident. Gone are the days of the scratched bumper, a shrug, shaking hands and parting ways with an apology. Folks are demanding reparations, and that ends up costing all of us down the line in higher premiums. Which leads us to reason four…

Reason No. 4: Changes in driving behavior.

Even as we continue to hear endless debates about working from home, overall the number of miles being driven has gone up, way up. More miles driven means more exposure to the road, and yeah, that guy, that other driver who is always the one at fault. Distracted driving is also a high contributor to this trend as drivers are spending time looking at their mobile devices rather than the traffic signal rapidly approaching.

These four reasons have created an environment where more cars and drivers think they are at Disneyland, speeding along the Autopia without a care in the world or bumping into each other on the former Tuck & Roll’s Drive ’Em Buggies attraction.

Our agency is looking at all of our customers’ renewal and trying to determine if there are other markets that may be more cost effective for all our clients.