Why did my car insurance rate go up?

It is the number one question we get from our personal insurance clients when their policy renews. “My car is a year older and worth less but my insurance premium has increased. Why?”.

Unfortunately, we have been asking this question for five consecutive years as car insurance rates in Atlanta and the entire country have continued to climb. Back in 2015, we had just finished enduring three consecutive years of car insurance rate increases and felt confident it would be leveling out….we had no idea the hammer had not even dropped yet. What has occurred over the past two years is likely the largest auto insurance market rate crash in the past twenty plus years. Almost every insurance company in Georgia has taken one or more car insurance rate increases during this time and many of the increases are in the double digits. One of the largest auto insurance companies in the country even announced a Seven Billion (with a B! ) loss on auto insurance countrywide in 2016. So, what is driving this extreme increase in auto insurance in Atlanta and around the country?
Essentially, we are experiencing a perfect storm involving several factors leading to the increased car insurance premiums.

Distracted Driving

Distracted driving is one of the primary root causes of the increase in accidents which leads to an increase in your insurance premiums. Texting and driving has become an epidemic around the country with estimates that over 50% of drivers on the road not paying attention in some capacity. What is even more concerning is one study found 77% of drivers believe they can safely text while driving! The numbers are clear that this is not the case and the problem is only getting worse. In just the past two years, deaths from car accidents have increased 14% which is the first noticeable rise in 50 years! In Georgia, the issue is even worse with a 22% increase in car fatalities in 2015 after nine consecutive years of decreases. It is clear something drastic needs to be done not only to save on car insurance but more importantly to save lives.

Increase in cost to repair vehicle

Compounding the issue of distracted driving in Atlanta and around the country is the rapid increase in the cost to repair vehicles. With all the modern technology in our vehicles the cost to repair them has been skyrocketing. Think about it, ten years ago it may have cost $1,000 to repair or replace a standard bumper. Today, many bumpers have built in cameras and sensors which drive the cost to repair or replace up dramatically. As cars become more technologically advanced in their safety features these costs will continue to rise for the foreseeable future.

More people on the road than ever before

Until the recession in 2008, the number of total miles driven in the United States continued to increase each year. During the recession, we saw a break in this trend until 2014. However, as the economy has improved and gas prices have decreased we are now seeing more cars on the road than at any time in American history. In fact, in 2015 there were over 3.1 Trillion miles driven and the numbers for 2016 and 2017 project to be even larger. If half the drivers are distracted then we are looking at over 1.5 Trillion miles of potentially distracted driving! Let that sink in for a moment…

Auto Lawsuit Severity Increase

To put a cherry on top of the above reasons for increased auto insurance in Atlanta and around the country, the cost of bodily injury claims is increasing as well. From 2014-2016 the average bodily injury claim increased 7%. However, different regulations and market dynamics in larger cities such as Atlanta create an environment where the claim cost increase is even larger.

With these four factors working together, it is likely that we will experience a couple more years of auto insurance rate increases especially in Atlanta and the surrounding areas. What can you do to keep your premium down during this rather challenging time in Atlanta auto insurance?

• Take a state approved defensive driving course such as the one provided by the National Safety Council, www.nsc.org. This could provide you with up to a 10% discount.
• Increase your collision deductible as turning in a small claim would likely harm you in the long run anyways.
• Bundle your auto and home insurance together to receive a package discount.
• DRIVE DEFENSIVELY! As discussed, no one can escape the increased auto insurance rates in Atlanta, Georgia and all around the country. Therefore, the best way to mitigate the increase is to not add fuel to the fire with an at fault accident. Be alert and don’t text and drive!

• https://www.bloomberg.com/news/articles/2017-02-28/state-farm-profit-plunges-on-7-billion-auto-underwriting-loss
• http://www.textinganddrivingsafety.com/texting-and-driving-stats
• https://www.nytimes.com/2017/03/07/opinion/a-public-health-crisis-that-we-can-fix.html
• http://blogs.wsj.com/economics/2016/01/27/american-drivers-are-back-on-the-road-in-record-setting-fashion
• http://www.iii.org/sites/default/files/docs/pdf/auto_rates_wp_092716-62.pdf