People ask us all the time why their auto insurance rates keep going up. While every situation is different, there are a few key things at play that are affecting all of us:
1) The frequency of claims is going up. Think about every time you're sitting at a light or, worse, driving down the street, and someone is paying more attention to their phone than the road in front of them. Or think about the touch screen display in your car that you now have to look at and touch just to change the radio station. Distracted driving is the #1 cause of auto accidents. The more accidents that happen, the more claims get filed, and the more insurers have to pay out of their coffers to cover the cost of those claims and the more they pass those costs onto us, the people carrying insurance.
2) The cost of claims is going up. We used to say we got in a 'fender bender' if we had a small accident, and that used to be true. Our bumpers were made out of plastic and dents could often be easily fixed by lightly tapping the dent back into place. Today, our bumpers might still be made out of plastic, but they have all sorts of technology built into them, like backup cameras. Backup cameras have all sort of computers and electronic components that can't be fixed just by tapping a dent back into place. So now not only is a claim filed, because it's an expensive repair, but the cost of that repair has skyrocketed. And, here in Michigan, we have the blessing and the curse of having auto insurance that covers unlimited medical expenses that are the result of an auto accident. When there is no cap on something, spending can and does get out of control. The more cost involved in a claim, the more cost is passed onto the consumer.
3) Some agents don't handle claims personally, which leads to claims being filed when it doesn't make sense. We'll dive into this more in another post, but you should always check with a trusted insurance agent before filing an insurance claim! Filing a claim can lead to higher insurance premiums down the road, much higher than the benefit of the filed claim!
To be sure, insurance, by definition, is pooled risk. It takes all of the good drivers and all of the bad drivers and places them in one pile. Claims are paid by the premiums from all of the insureds on a carrier's books. So even if you haven't filed a single claim, it's because of the increase in frequency and cost that your rates go up.
While we can't change the way insurance works, we can help you make changes to your insurance to make it work better for you and we can help you make better decisions about filing claims! Call the experts at Levin Insurance Agency at (248) 531-8300 and ask us how we can help you today!