Many consumers face the unfortunate reality of a significant car insurance increase. This blog post will examine the issue of car insurance rate increases, exploring the factors behind it and offering practical advice on handling this trend. Speak with a West Palm Beach car accident lawyer from Lytal, Reiter, Smith, Ivey & Fronrath for additional assistance.
Why are car insurance rates increasing so much?
Before tackling a problem, it’s crucial to understand it, and that involves identifying all possible causes of rate increases. Technological advancements in car manufacturing have made vehicles safer and more efficient. However, they have also made repairs and part replacements more costly. As a result, insurers must increase their premiums to cover these costs, leading to price increases in car insurance.
Rise in natural disasters
Another factor contributing to the car insurance increase is the rise in natural disasters. Severe weather events such as floods, wildfires, and hurricanes can cause extensive damage to vehicles. This reality compels insurance companies to raise their rates to cover the potentially substantial costs of these weather-related claims.
Uninsured and underinsured motorists
The growth in uninsured or underinsured motorists is also a significant contributor. Insurance companies often have to pay more than expected when accidents involve these drivers, leading to widespread rate increases to offset these costs.
Having a grip on these underlying factors can equip you with the knowledge needed to anticipate when a car insurance price increase might occur, allowing you to better plan and budget.
Controlling the impact of car insurance rate increases
Though the looming shadow of car insurance increases might seem inevitable, certain strategies can help lighten the blow. Maintaining good driving habits and avoiding speeding tickets or traffic violations can help keep your premiums in check, but you can also explore the following strategies.
Increase your deductible
Opting for a higher deductible (i.e. the amount you’re willing to pay out-of-pocket in case of an accident) can reduce your insurance premium, but this approach should be employed cautiously. Remember, a high deductible means you could face considerable out-of-pocket costs if an accident occurs.
Maintain a good credit score, driving courses, and bundling insurance policies
Other tactics to combat car insurance rate increases include maintaining a good credit score, as many insurers use credit-based insurance scores to determine premiums. Also, participating in defensive driving courses can demonstrate to your insurer that you’re committed to safe driving, potentially earning you a discount. Bundling insurance policies (i.e., combining your car insurance with your home or renter’s insurance under one provider) can also yield lower rates.
Explore usage-based insurance
In this era of technological advancements, usage-based insurance (UBI) has emerged as a compelling alternative to conventional car insurance policies. This contemporary model allows insurers to calculate premiums based on your actual driving behavior, using data captured through cutting-edge telematics technology.
This shifts the focus from demographic information or vehicle statistics, which traditionally dictated rates. If you’re a cautious driver with fewer miles on the odometer, this option can substantially relieve car insurance price increases.
Usage-based insurance operates on the fundamental premise of “pay how you drive.” This principle is enabled using a small telematics device or mobile app installed in your car. These tools collect information on various aspects of your driving habits, including the following.
Speed
How often do you exceed the speed limit? Regular speeding can indicate risky driving behavior, which may lead to higher insurance premiums.
Braking
The telematics device or app will record instances of hard braking. Frequent hard braking can suggest aggressive or unsafe driving habits, potentially leading to higher rates.
Mileage
The number of miles you drive can significantly impact your insurance premiums. Less time on the road generally equals less risk of an accident, often leading to lower rates.
Time of day
If you frequently drive late at night or during peak hours, you may be at a higher risk for accidents due to increased traffic or impaired drivers.
Location
Some UBI systems also track where you drive. If you regularly drive in high-risk areas with more traffic or higher accident rates, this could impact your premiums.
Cornering
Some advanced systems monitor how you handle turns. Taking corners too quickly can be a sign of risky driving.
Phone usage
With distracted driving on the rise, some insurers now monitor mobile phone usage while driving.
By providing insurers with a detailed portrait of your driving habits, usage-based insurance allows for more accurate risk assessment. This personalized approach often rewards safe drivers with lower rates, making it an appealing solution for those grappling with steep car insurance increases.
While usage-based insurance may not be the right fit for everyone, it does offer an intriguing opportunity to exert more control over your car insurance rates. By encouraging safer driving habits and offering a personalized approach to premium calculation, UBI could be a crucial tool in managing the cost of car insurance in this era of rising rates.
Contact Lytal, Reiter, Smith, Ivey & Fronrath or call (561) 655-1990 for more information.
