Skip to content

Who Can We Blame for High Car Insurance Rates?

    2 minute read

    Why does everything cost more than it used to?

    image of cash moneyThis is the question that is frequently asked by Americans; but usually, the answer is pretty complicated. Certainly, it would be easier (and more satisfying) for us to be able to point to one single factor as the cause for higher prices.

    The reality is that high costs are usually the result of many different factors, causes, and components. The same phenomenon is true when it comes to auto insurance rates.

    finger pointingSo instead of blurting out a quick retort to the question as to why auto insurance is so expensive, let’s examine the elements which tend to boost premiums and how much impact they may actually have on rates.

    • Factor: Auto insurance providers

    Believe it or not, the profit margin for insurers is much lower than many other industries (like oil and gas, medical equipment, Internet services, and communications equipment). Also remember that insurance markets are highly regulated by individual states, namely the respective Department of Insurance, which add significant cost to insurance companies.

    • Factor: Auto manufacturers

    It’s true that automakers have made their cars safer with a large number of safety features and equipment. However, the computerized and technological nature of modern vehicles makes them more costly to repair both inside and out, which tends to boost auto insurance claim payouts in the event of covered losses or claims.

    • Factor: Inexperienced drivers

    It has been said that practice makes perfect. And since teens and young adults are less experienced at driving than their more seasoned counterparts, they tend to get into more accidents, often resulting in more insurance claims.

    • Factor: Health care costs

    Medical costs related to auto accidents can be costly. Medical costs associated with injury claims increase the overall cost of insurance and may often result in higher rates.

    • Factor: Uninsured motorists

    If everyone had auto insurance, then those responsible for accidents would be able to pay (via their policies and up to the limits purchased) for the vehicle damage and bodily injury they may cause. But when someone without insurance causes damage to someone who does have insurance, the victimized policyholder ends up paying for it, and, over time, the costs are often passed on to every driver who has auto insurance.

    • Factor: People who file fraudulent claims

    Some experts believe that as many as one of out every three auto insurance claims involves fraud. As a result, insurers pay out money to people who don’t need or deserve it … and the costs get passed along to the law-abiding insurance customers.

    Unfortunately, you can’t do much about most of these cost-raising factors. But you can lower your individual premiums by reducing your risk of being in a collision (by driving more safely or fewer miles). You can also look for discounts on your auto insurance policy.

    Auto Insurance Specialists has been helping drivers secure affordable auto insurance coverage for many years. So instead of wasting your breath playing the “blame game” with regard to high auto insurance rates, why not channel your energies into finding a lower rate for you and your family?

    This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverage’s in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.