Why Your Auto Insurance Premiums are Going Up

[athena53]

This has been discussed in other threads (which I can't find, of course) but this article landed in my e-mail today. It was written by and for actuaries but is clear enough for the average person to understand.

https://ar.casact.org/unexpected-developments-in-personal-auto/

Briefly:

It's actually the Physical Damage costs (theft, collision, etc.) that are rising faster than Bodily Injury Liability claims.

Claim Counts aren't rising but average claim cost is.

Catalytic converter thefts are increasing and they can cost $1,000 to $3,500 to replace. Car thefts in general are rising.

Increasing tech adds to claim and repair costs. Even if my puny Honda Civic crashes into an EV the battery in the EV is likely to be destroyed. And the high-tech windshield in a vehicle such as my puny Civic can cost over $1,000 to replace. (BTDT with a large crack from gravel thrown up by a passing truck.)

Since the COVID-19 pandemic, primary causes of accidents such as distracted driving, speeding and driving while under the influence of alcohol or drugs, are on the rise.

Car prices- new and used- are increasing faster than overall inflation.

As I've noted before in these discussions, personal Auto and Homeowners rates are strictly regulated and must be supported by data (plenty of which is in the article)- not just "Well, you know, because of COVID". The reasons are real.

 

[Mark1]

The post reminded me of an article I recently ran across on catalytic converter theft. Looks like things might be improving on that front.

"How California is finally making progress on rampant catalytic converter theft"
https://www.sfgate.com/bayarea/article/california-catalytic-converter-theft-dropping-18452836.php

 

[Chuckanut]

This has been discussed in other threads (which I can't find, of course) but this article landed in my e-mail today. It was written by and for actuaries but is clear enough for the average person to understand.

https://ar.casact.org/unexpected-developments-in-personal-auto/

Briefly:

It's actually the Physical Damage costs (theft, collision, etc.) that are rising faster than Bodily Injury Liability claims.

Claim Counts aren't rising but average claim cost is.

Catalytic converter thefts are increasing and they can cost $1,000 to $3,500 to replace. Car thefts in general are rising.

Increasing tech adds to claim and repair costs. Even if my puny Honda Civic crashes into an EV the battery in the EV is likely to be destroyed. And the high-tech windshield in a vehicle such as my puny Civic can cost over $1,000 to replace. (BTDT with a large crack from gravel thrown up by a passing truck.)

Since the COVID-19 pandemic, primary causes of accidents such as distracted driving, speeding and driving while under the influence of alcohol or drugs, are on the rise.

Car prices- new and used- are increasing faster than overall inflation.

As I've noted before in these discussions, personal Auto and Homeowners rates are strictly regulated and must be supported by data (plenty of which is in the article)- not just "Well, you know, because of COVID". The reasons are real.

Sadly my empirical observations of other drivers as I drive the roads supports the above conclusions.

 

[athena53]

The post reminded me of an article I recently ran across on catalytic converter theft. Looks like things might be improving on that front.

"How California is finally making progress on rampant catalytic converter theft"
https://www.sfgate.com/bayarea/article/california-catalytic-converter-theft-dropping-18452836.php

Good to know they're making progress on this (helped by dropping precious metal prices). This has been a big problem in my area. I'm fortunate to have enough garage space to keep my car and those of any overnight guests but plenty of people have no garage and have to park on the street or in open parking lots.

 

[scrabbler1]

Thanks for posting the article and link. I saw my former boss quoted a few times in it. Cool.

 

[Stormy Kromer]

I w2rk a couple days a week at a small town Body Shop. A good friend that I spent time in with the Fire and rescue Squad as volunteers in our youth.. Auto Parts and paint prices are skyrocketing. Help is unavailable at any price. Waiting lists are 6 months long.

Don't get in an accident now unless you have 6 months and a spare car to drive This is why auto insurance rates are going up.

 

[Stormy Kromer]

This has been discussed in other threads (which I can't find, of course) but this article landed in my e-mail today. It was written by and for actuaries but is clear enough for the average person to understand.

https://ar.casact.org/unexpected-developments-in-personal-auto/

Briefly:

It's actually the Physical Damage costs (theft, collision, etc.) that are rising faster than Bodily Injury Liability claims.

Claim Counts aren't rising but average claim cost is.

Catalytic converter thefts are increasing and they can cost $1,000 to $3,500 to replace. Car thefts in general are rising.

Increasing tech adds to claim and repair costs. Even if my puny Honda Civic crashes into an EV the battery in the EV is likely to be destroyed. And the high-tech windshield in a vehicle such as my puny Civic can cost over $1,000 to replace. (BTDT with a large crack from gravel thrown up by a passing truck.)

Since the COVID-19 pandemic, primary causes of accidents such as distracted driving, speeding and driving while under the influence of alcohol or drugs, are on the rise.

Car prices- new and used- are increasing faster than overall inflation.

As I've noted before in these discussions, personal Auto and Homeowners rates are strictly regulated and must be supported by data (plenty of which is in the article)- not just "Well, you know, because of COVID". The reasons are real.

Athena... Do you have an insurance background? I do too....

 

[Drake3287]

At least here in California, 1 in 5 drivers have no vehicle insurance let alone even a drivers license. And who pays for those uninsured motorists when they get in an accident? I do and it's costs us legally driving California drivers billions of dollars each year in the way of uninsured motorist coverage.

Legally, every vehicle in California is required to carry insurance but of course our liberal politicians refuse to require proof of insurance when registering a vehicle. No wonder everyone is moving out.

 

[athena53]

Athena... Do you have an insurance background? I do too....

Yes-retired property-casualty actuary. And now DS has moved from Claims and is now taking actuarial exams!

 

[jollystomper]

I count myself very, very fortunate to have a good friend who can do auto body work. He charges us (and other friends) a fraction of what it would cost going to a repair shop, especially for older cars.

 

[JBTX]

At least here in California, 1 in 5 drivers have no vehicle insurance let alone even a drivers license. And who pays for those uninsured motorists when they get in an accident? I do and it's costs us legally driving California drivers billions of dollars each year in the way of uninsured motorist coverage.

Legally, every vehicle in California is required to carry insurance but of course our liberal politicians refuse to require proof of insurance when registering a vehicle. No wonder everyone is moving out.

https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists

I am not sure the overall data are supporting the narrative you are espousing, but I’ll leave it at that.

 

[JBTX]

This has been discussed in other threads (which I can't find, of course) but this article landed in my e-mail today. It was written by and for actuaries but is clear enough for the average person to understand.

https://ar.casact.org/unexpected-developments-in-personal-auto/

Briefly:

It's actually the Physical Damage costs (theft, collision, etc.) that are rising faster than Bodily Injury Liability claims.

Claim Counts aren't rising but average claim cost is.

Catalytic converter thefts are increasing and they can cost $1,000 to $3,500 to replace. Car thefts in general are rising.

Increasing tech adds to claim and repair costs. Even if my puny Honda Civic crashes into an EV the battery in the EV is likely to be destroyed. And the high-tech windshield in a vehicle such as my puny Civic can cost over $1,000 to replace. (BTDT with a large crack from gravel thrown up by a passing truck.)

Since the COVID-19 pandemic, primary causes of accidents such as distracted driving, speeding and driving while under the influence of alcohol or drugs, are on the rise.

Car prices- new and used- are increasing faster than overall inflation.

As I've noted before in these discussions, personal Auto and Homeowners rates are strictly regulated and must be supported by data (plenty of which is in the article)- not just "Well, you know, because of COVID". The reasons are real.

Our premiums have gone up a lot the past few years - a little bit due to an accident, a bit more that we have another non Driver (disabled, no license ) in the house that is counting against us anyway, but the rest just flat out increases. It can roughly be divided into thirds 1/3 collision comp, 1/3 uninsured. Those last 2 are a much bigger percent than years ago. We have 2 sedans that are 6-7 years old and both worth less that $20k. Would probably make mathematical sense to drop collision and comp but it would just suck to be in an accident, not even necessarily your fault and have to spring for up to $20k out of pocket.

 

[Midpack]

At least here in California, 1 in 5 drivers have no vehicle insurance let alone even a drivers license. And who pays for those uninsured motorists when they get in an accident? I do and it's costs us legally driving California drivers billions of dollars each year in the way of uninsured motorist coverage.

Legally, every vehicle in California is required to carry insurance but of course our liberal politicians refuse to require proof of insurance when registering a vehicle. No wonder everyone is moving out.

https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists

I am not sure the overall data are supporting the narrative you are espousing, but I’ll leave it at that.

Your link, from 2019, shows 1 in 6 uninsured drivers in California, and 1 in 7.9 nationwide. Could be 1 in 5 for CA in 2023. Seems to support the “narrative?”

Mississippi was 1 in 3.4 - yikes!

https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists

 

[Morgan22]

At least here in California, 1 in 5 drivers have no vehicle insurance let alone even a drivers license. And who pays for those uninsured motorists when they get in an accident? I do and it's costs us legally driving California drivers billions of dollars each year in the way of uninsured motorist coverage.

Legally, every vehicle in California is required to carry insurance but of course our liberal politicians refuse to require proof of insurance when registering a vehicle. No wonder everyone is moving out.

There are other states that are worse for uninsured drivers.

And people are generally moving out to cheaper cost of living areas.

To get back on topic, I recently saw a presentation related to the property/casualty industry and insurance fraud. It seems that some consumers are becoming more tolerant of fraud which of course will raise premiums for all.
Wish I could find the presentation online that I saw. Insurancefraud.org has some interesting stats. https://insurancefraud.org/fraud-stats/

 

[Badger]

For a couple of decades I have been saying that a large number of drivers don't care about getting into an accident because their insurance will cover expenses (until they are dropped). Then there are those who drive without insurance and/or without a license. It's been getting progressively worse.
I used to enjoy driving in the 70s,80s, and 90s and was always attentive and did everything to avoid accidents even though my cars were mostly old and used. I didn't need the inconvenience or expense of an accident. I have never had an accident or a claim in 55 years of driving yet I am paying for all those who don't care. I don't trust anyone driving anymore. It's the drivers that are causing the problem more than the insurance companies.
I suppose this could just as easily be posted in Pet Peeves.

Cheers!

 

[wrigley]

I remember my son telling me what his buddies would do here in Florida. Buy a cheap car with cash, get insurance, register the car and pay the registration for 2 years, then cancel their insurance. It would take the state forever to figure out they weren't insured and sometimes they never did figure it out. If they got stopped by a cop they would just plead ignorance when the cop found out they weren't insured. The perfect plan!

Mike

 

[scrabbler1]

Keep in mind that the percentage of uninsured drivers also varies within a given state. The more urban areas such as cities have higher rates of uninsured drivers than the more rural areas. From my actuarial work during my 23-year career, these differences were often rather large, to the point where we often separated cities from the rest of the state when we had to use these percentages in our pricing of UM and UIM coverages.

 

[athena53]

When I was a Baby Actuary in the late 1970s, Uninsured/Underinsured Motorists coverage was cheap- like $10/year. I need $500K/$500K limits to meet the requirements of my Umbrella policy but right now I'm paying $160/year for Uninsured and $314/year for Underinsured.

It's a vicious circle. Insurance costs go up and it's less affordable for more people so they go without- especially those who are "judgment-proof". The minimum limits you're required to carry are silly- in my state you have to carry $25,000 per person/$50,000 per accident for bodily injury. How far does that go? If they increase the required coverage, more people stop carrying it, of course.

I see billboards in some states offering an insurance card for what's basically the premium for the first one or two months at a very low price. I'm suspecting a lot of these customers just let it lapse after that.

Those of us who have assets to protect pay for everyone.

 

[aja8888]

This has been discussed in other threads (which I can't find, of course) but this article landed in my e-mail today. It was written by and for actuaries but is clear enough for the average person to understand.

https://ar.casact.org/unexpected-developments-in-personal-auto/

Briefly:

It's actually the Physical Damage costs (theft, collision, etc.) that are rising faster than Bodily Injury Liability claims.

Claim Counts aren't rising but average claim cost is.

Catalytic converter thefts are increasing and they can cost $1,000 to $3,500 to replace. Car thefts in general are rising.

Increasing tech adds to claim and repair costs. Even if my puny Honda Civic crashes into an EV the battery in the EV is likely to be destroyed. And the high-tech windshield in a vehicle such as my puny Civic can cost over $1,000 to replace. (BTDT with a large crack from gravel thrown up by a passing truck.)

Since the COVID-19 pandemic, primary causes of accidents such as distracted driving, speeding and driving while under the influence of alcohol or drugs, are on the rise.

Car prices- new and used- are increasing faster than overall inflation.

As I've noted before in these discussions, personal Auto and Homeowners rates are strictly regulated and must be supported by data (plenty of which is in the article)- not just "Well, you know, because of COVID". The reasons are real.

Great article, thanks for posting it. I passed it along to my group of friends.

 

[marko]

I must be living in an alternate universe. Or, more likely already paying top dollar here in Massachusetts because none of my insurance premiums--car, homeowners, umbrella have gone up more than a few bucks...and I mean like under $200 a year for the year ahead.

DW just got a 2024 BMW lat month and our premium went up just a smidge from her previous car.

 

[athena53]

I must be living in an alternate universe. Or, more likely already paying top dollar here in Massachusetts because none of my insurance premiums--car, homeowners, umbrella have gone up more than a few bucks...and I mean like under $200 a year.

Wow. I'm in MO and mine renews every 6 months (so they can reap the effects of rate increases faster ). I budget for a 10% increase every 6 months. It nearly always exceeds that.

 

[FiveDriver]

I just shopped our Home & Auto Insurance package around to get current quotes. All the big name insurers only write 6 month Auto policies around here. And of course it goes up over the past two years.

I found an Independent Agency that surveyed the big name insurers. They came back with a substantial savings. More than $150 on a 6 month policy with Progressive....same coverage amounts, with an increased coverage for Uninsured/Underinsured Motorists (necessary around here).

I believe that you have to shop your coverage around every few years. We were with GEICO for a few years and they raised the price every 6 months til it got out of hand. Now Allstate just did the same thing. It's standard procedure here.

When we lived in New Jersey we were with NJ Manufacturers Ins Co. for 35 years. They were always the lowest cost, and at the end of each year they sent out checks to those with no claims. There's no such thing as 'allegiance' any more.

 

[Chuckanut]

A lot of states minimum insurance rates are inadequate to say it mildly. The guy who totaled my 2012 Camry had the state minimum. It was not enough to cover my 7 year old Camry when he totaled it. Fortunately, my insurance company paid me the difference. And the guy who hit my car, paid the insurance company. There were no injuries so he dodged a bullet. Had the car been occupied.... who knows what the final cost to him might have been.

The thing is he wasn't a low income person.

 

[wrigley]

I must be living in an alternate universe. Or, more likely already paying top dollar here in Massachusetts because none of my insurance premiums--car, homeowners, umbrella have gone up more than a few bucks...and I mean like under $200 a year for the year ahead.

DW just got a 2024 BMW lat month and our premium went up just a smidge from her previous car.

You are most likely in a very well established area in Mass. Think about this. I live in Florida in a very large military town. Different people moving in and out of here on a regular schedule. Also, look how many people are relocating to Florida on daily basis. Don't take this the wrong way.....but I don't see a whole lot of people excited about moving to Mass!

Mike

 

[FlaMariner]

seems like a slippery slope further towards the 3rd world.....

drivers w/no insurance, thefts up, increased reckless driving

Also, older cars on the road (avg age now is 12 years old)

Interesting data/article thanks for sharing.....

(BTW, just dropped collision here to save a few bucks....car is 10 years old....self-insure time)