Higher Insurance Rates? Blame Rising Health Care, Car Costs
Recent negative economic trends have impacted virtually everyone in one way or another. Many people are looking for ways to decrease spending, but for vehicle owners, auto insurance is a necessary expense that unfortunately may only be increasing. An economy with rising health care costs, ballooning car costs, and a bad job market usually translates into higher coverage costs overall. If an insurer suffers greater-than-expected financial losses because of fluctuating prices in other industries and bad investment performance, these losses may be passed on to policyholders in the form of higher premiums. In addition, consumers’ eroding credit may push their individual costs upward.
When an insured motorist is involved in an accident, an insurance company is usually the one that pays for vehicle repairs. And when the cost of cars goes up, the amount that those insurers have to pay for repairs also increases. Recent information gathered by TrueCar.com places the average transaction price for a new car in April 2012 at $30,303, up 4.2 percent from April 2011. Higher vehicle value and improved technology has made modern cars increasingly expensive to repair, resulting in greater losses for coverage providers when they have to pay out on individual claims. According to the Insurance Information Institute (III), the average cost of property damage, collision, and comprehensive claims went up 17 percent, 10 percent, and 28 percent, respectively, between 2000 and 2010.
