Nobody ever wants to be the bearer of bad news and in fact I hope I am wrong, but I think consumers should beware of rising auto insurance rates and here is the reason why.
The primary reason auto insurance rates are going to start increasing is multi faceted. First and foremost is the simple reason that auto insurance companies are losing money and no company is in business to lose money. I know that is hard to believe but the evidence proves it is true. Insurance companies are losing money on auto insurance with loss ratios as high as 130%. This means for every $1.00 in premium they collect, they are spending $1.30 on claims. Why are they spending so much on claims? Simple, more people are getting in accidents than ever before. Most insurance companies are reporting that the number of accidents or frequency of accidents is increasing for one specific reason: distracted driving. To many of us are constantly checking our cell phones while driving and this is causing the number of accidents to increase and the severity of accidents to be worse.
Another reason auto insurance rates will be rising is for the plain and simple reason that it cost more to fix cars these days. Years ago if you dented your bumper the repair company would hammer out the dent, put some bondo on it, sand it over and paint it. Today if you dent your bumper many times the bumper that cost $200 to fix years ago now cost a thousand or more to fix because of all the sensory equipment and oft times camera equipment it in. Many cars bumpers now a days are lined with sensors that help inform the driver when they are to close to something. While this helps avoid accidents, when there is an accident, the cost to fix all the sensor and camera equipment is expensive.
One thing is for sure, when the data shows insurance companies are losing money, they cannot continue to stay in business if things don’t change. Sure, they will try and do some things to help mitigate their losses but at the end of the day, if the losses are wide spread and most companies are experiencing similar losses, you can rest assured that they will all need to start raising their rates.
As a consumer you can also mitigate your losses, meaning if your premium goes up you can do something about it. You can call Insurance Professionals of Arizona for a free, no obligation auto insurance quote. We want to help you save on your car insurance so please give us a call at 480-981-6338.