Increasing auto insurance rates have become a hot button topic here in Fort Worth and North Texas.
Just about every insurance review I do now people want to know why their rate has increased. In fact I’m getting that question so much I figured it would be a great subject to answer
First let’s talk about factors that will affect everyone. Remember that insurance at its very core is simply a transfer of risk.
You’re paying the insurance company a certain amount of money (called premiums) to carry a certain amount of risk. But you’re not the only one.
Thousands even tens of thousands of people in your same area have made the same agreement with the same insurance company so you’re part of a shared risk pool of people. In our case, it is fort worth auto insurance customers.
The first thing that can and will affect your rate is claim trends. As the collective risk of a pool of people goes up that means the premiums for all those people will also go up.
Right now in our area we’re seeing some claim trends that are causing everyone’s rates to increase. It doesn’t matter which company you’re with, insurance will continue to be more expensive until these trends change. Things like:
Cheap Gas Affect Your Auto Insurance Rates.
Lower gas prices means people are going to drive more. The more people drive the more likelihood they’ll get into accidents.
There’s a direct correlation between how much people drive and the number of accidents.
There’s also a direct correlation between cheap gas and the type of vehicle people purchase.
A few years ago when gas was north of $3.00 a gallon car companies could hardly give away SUVs and trucks.
Car companies were offering tens of thousands of dollars off just to move inventory.
Today with the cheaper gas prices these same big gas guzzlers are #1 sellers.
More expensive vehicles Affect Your Fort Worth Vehicle Insurance Costs
20 years ago a middle class family probably would have never dreamed of buying a vehicle that costs $50,000 or more.
Today if you want a bigger SUV you’re going to pay $50-$70,000 or more for a new one.
Even used SUVs will run you $30-$50,000.
More expensive vehicles mean that they are also more expensive to repair.
A perfect example is bumpers. You used to be able to replace a simple bumper for $500.
Now with the technology that’s included in bumpers like cameras, impact sensors, warning sensors a simple bumper replacement can run $2000!
Technology Distractions Increase Your Auto Insurance Rates
Technology is really nice.
I love the ability to search anything I need anytime I want all from the convenience of a smart phone that fits into my pocket.
I can even watch movies on my phone anytime I want!
It’s amazing the technological advances we’ve seen in the last 20 years. But that same technology is also to blame for a higher number of wrecks on the road.
Next time you’re on the highway just glance around the vehicles you pass, or the ones passing you.
Count how many drivers you see with their head buried in their smart phone all while piloting their vehicles at 60 mph or more.
It’s been proven that driving while distracted by your smart phone is more dangerous that driving intoxicated. Texting and driving in Texas don’t mix.
It’s an absolute epidemic in our culture and I literally see it happen every time I drive and I’m sure you do too!
Undisclosed Drivers Affect Insurance Rates
An undisclosed driver is simply someone that’s driving a vehicle that they are not also listed on the vehicles auto policy.
It could be a relative, it could be a neighbor or a coworker borrowing a vehicle.
Unfortunantely, it could also be a 16 year old or 17 year old that the parents didn’t want to add to their insurance policy because they didn’t want to pay the higher premiums.
We see accidents with undisclosed drivers all the time.
In fact, a recent study showed that up to 40% of the undisclosed drivers with one insurance company were responsible for causing accidents.
That is an absolutely staggering number!
The problem with undisclosed drivers is very simple. Insurance companies can’t properly rate them precisely because they don’t know about them.
Yet when they have accidents the insurance companies are still held responsible to pay for the damage they cause.
And since the insurance companies haven’t been able to rate for them before the accident they have to make up for that on the back end.
The end result is that everyone’s car insurance rates in that pool go up.
Think about it for a moment: you’ve probably had a conversation before about your auto rates with a relative, a coworker, maybe a friend and you realize they’re payments are different from yours.
So what’s the difference? Stay tuned for Part Two in this series.