“Why Are Auto Insurance Premiums Rising?”
Right now, auto insurance in California is in a bit of an upheaval. Premiums are going up leaving many people to wonder why their monthly insurance payment is higher even though they haven’t had any claims. For many drivers, maintaining a clean driving record is a source of pride and a way to keep insurance premiums low. However, it can be disheartening to discover that your insurance rates have increased despite your unblemished record.
Recent Auto Insurance Loss Trends
While during the pandemic, insurance companies saw windfall profits due to everyone staying home instead of driving, an interesting trend occurred: Accidents became more severe and more common as drivers returned to the road.
Inflation and Cost of Living
Inflation affects everything, including the cost of car insurance. As the cost of living increases, so do the costs of repairing vehicles as well as medical expenses for people injured in an auto accident. This has led to insurance companies raising their rates to cover the rising costs. While your driving record hasn’t changed, the overall economic landscape may have, affecting your insurance premiums.
California’s Political Landscape
In the years following the pandemic, the California Department of Insurance has been slow to allow companies to raise rates. Many experts point to the fact that the Insurance Commissioner was running for reelection and, being term-limited, is using his time as Commissioner to build a resume’ for whichever office he runs for next. This theory certainly would seem to explain why once the election was over, he began approving the 3-year backlog of rate filings.
What Can I Do to Lower My Auto Insurance Premium?
Talk To Your Insurance Agent
Without a doubt, you best money saving ally is your insurance agent. They can tell you what discounts you are missing out on, how you might tweak your policy to bring down the premium and other opportunities to save money on your insurance.
Make Sure Your Auto Policy Information Is Current
In California, factors like length of commute and annual mileage can make a significant difference in your premium. Make sure the annual mileage on your policy accurately reflects what you actually drive. Some companies like Mercury Insurance even offer a discount if you enroll in a program that automatically updates your vehicles’ use.
Shop Your Insurance
The time-tested option of getting quotes can be an effective way of finding a less expensive policy. This requires some patience and can become very time consuming as you call company after company. In fact, many companies in this current difficult market are not even writing new business. Talk to an INDEPENDENT insurance agent if you want an expert to shop for you. Already experts on the local market, they can quickly gather the quotes for you and can find you a company that’s currently writing in California.
Consider Your Coverages
Another way to soften the blow of a premium increase is to make adjustments to your coverages. Raising your deductibles on Comprehensive and Collision coverages could save you hundreds. If you can afford to walk away from the vehicle if it were stolen or totaled in an accident, consider dropping those coverages altogether. This could especially be helpful on cars driven by youthful drivers.
Conclusion
While having a clean driving record is undoubtedly a significant factor in keeping your insurance rates low, it’s important to remember that other variables can influence your premiums. Industry-wide trends, geographic location, personal circumstances, policy changes and insurance company policies all play a role in determining how much you pay for car insurance. If you’re concerned about a recent rate increase, it’s a good idea to contact your insurance agent to understand the specific reasons behind the change and explore potential ways to lower your premiums without compromising your coverage.