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Fall 2020  Volume 16, Number 3        

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Car Insurance Premiums Trend Lower

Car insurance premiums are down as compared to other costs, including insurance cost drivers like hospital rates and repair shop costs.

One byproduct of the pandemic is that we're driving 16.6 percent or 264.2 billion miles less this year than last year, according to the Department of Transportation. Many car insurers have noticed the impact in terms of fewer accidents and have been returning premium dollars to customers.

However, even before the onset of the pandemic, insurance premiums had been trending lower, especially when compared to hospital services, car repair costs, and the Consumer Price Index. "This has been happening even as two major contributors to claims have grown much faster. In the case of hospital services, prices have not just been rising — growth has been accelerating since last July," said Triple-I chief economist Steve Weisbart.

Even as hospital and repair costs, which are two of the biggest contributors to claims costs, have grown faster than inflation, the prices policyholders pay for coverage have grown more slowly than consumer prices generally.

The downward trend in accidents accounts for some of the stability of car insurance costs as compared to other costs. But the Insurance Information Institute points out that the car insurance premiums customers pay also get the benefit of an open marketplace where many insurers compete against each other for customers.

Of course many factors come into play when determining what insurance premium you will pay: age, driving record, how and where you drive, where you park your car, and — yes, even your credit score, in many cases where it's not illegal to do so.

These are factors that you mostly have control over. "You can shop around. You can change how much or what type of coverage you buy. You can bundle auto with other coverages. You can get fewer tickets and improve how you handle your credit," points out Weisbart.

As telematics or usage-based insurance, which we wrote about in our last issue, becomes more widely available and popular, your options will increase.

Compare the cost of insurance with cable and satellite TV, for instance, where your choices are quite limited. Usually the channels you want come bundled with a lot of other channels you don't want, but you must pay for all of them. Again, as with other services, the cost of car insurance has increased at far slower rates.

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In this issue:

This Just In...

6 Steps to Hurricane Preparedness

Car Insurance Premiums Trend Lower

13 Tips for Avoiding Identity Theft

When to Create a Home Inventory



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