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Lower gas prices equals more road traffic equals more car crashes equals more insurance claims equals higher premiums. That’s the not-so-short story of why your car insurance rates could go up this year, but let’s break it down. Gas prices in 2015 were substantially lower than prices throughout both 2014 and 2013, according to AAA, and the new year is ringing in the lowest gas prices for this time of year since 2009.
That kind of money adds up, and consumers have taken notice: Forbes reports that the increase in miles driven on U.S. roads has been substantial, likely due in a large part to lower gas prices. Maine, for example, saw more drivers pass through their tolls in June and July of 2015 than they have ever seen. And increase in road traffic impacts many things, one of the most important being car crashes. The simple truth is that the greater abundance of cars on the road increases the occurrence of crashes, which generate more insurance claims.
The Auto Insurance Industry Is Losing Money
Official crash statistics take time to compile. However, while hard numbers about how many traffic crashes happened during 2015 isn’t yet available, we do have other indicators that 2015 was especially dangerous for drivers. According to Forbes, major auto insurance companies are bleeding money, reporting significant revenue decreases and even losses in underwriting profits from last year.
Some auto insurance companies are placing the blame for their loss in revenue on more claim payouts to customers because of more traffic crashes. Others say the increase in economic activity over the past couple of years has put more cars on the road, which has led to more car accidents and crashes.
How to Avoid a Rate Hike
Whenever your car insurance policy is up for renewal, whether it’s been a bad year for the auto insurance industry or not, the absolute best thing you can do to keep your premium as low as possible and ensure you secure the coverage you need is to shop around. Comparing the different policies insurers have to offer, their prices and potential discounts, and even sharing the prices you’re offered at one company with a competitor can ensure you don’t overpay and aren’t a target for the questionable practice of price optimization.
Other ways to save on insurance include:
- Improving your credit score.
- Take a defensive driving course to lower rates by as much as 10%.
- Consider bundling your auto insurance with other insurance policies you carry, like homeowners insurance.
- Consider adjusting your deductible if you are quoted rates that exceed your budget. But don’t necessarily take the highest deductible/lowest premium combo. Instead, carefully consider how much you can afford to pay out of pocket should an emergency arise.
- See if you might qualify for low mileage rate reductions or consider if usage-based insurance might be right for you.
- Look into every discount you might qualify for (often insurers don’t offer them up without being asked). Options to look into include good student, recent graduate, age-based discounts, discount for married couples and discounts for veterans.
If you have questions or would like more information, call any of our 3 locations in the Chicago-land area today. Our customer service representatives are eager to share their knowledge and speak with you about any insurance related topic. Zeiler Insurance is an independent insurance agency that has been providing quality customer service for 101 years in our Alsip, Chicago, and Gurnee locations. Our goal is to help you understand insurance as well as provide you with the most competitive insurance rates in the industry. Whether you are a customer or just want more information, let us help you with our years of expertise in the insurance business.