McQuiston: Three Reasons For Auto Rate Increases

The Jemez Agency
As 2017 draws to a close, let’s reflect on some insurance-related items in the industry.
While storms and hurricanes certainly dominated the headlines for a while, one issue that has been consistent throughout the year is an increase in auto insurance rates. If you’ve seen a rate increase this year and have wondered why (especially if you have a clean driving record), this column is for you.
Why are rates going up? There are three primary reasons:
  • 1. Distracted Driving: The National Highway Traffic Safety Administration ( reports that 71 percent of young drivers have admitted to texting and driving. At 55 miles per hour, the average text message takes your eyes off the road long enough to cover a football field. Do the math and tell me that’s not a serious problem. In fact, the statistics are already telling us it’s a problem. For example, in 2015 more driving-related deaths occurred in any year since 1966. Worse yet, we’re on pace for a two-year increase of 18 percent.
  • 2. Technology in Vehicles: A couple of our insurance companies have specifically cited this as a large factor in increased claim payments. The rear end of cars used to be tail lights and a bumper. Now they have backup sensors, cameras, kick-activated tailgate sensors, etc. In 2005, a Ford side mirror cost $845. In 2015, it cost $1,349. Again, think about the turn signals that are now inside mirrors along with blind spot warning lights and mirror defrosters. That’s a lot more technology in the same amount of space.
  • 3. Healthcare Costs: I’m sure you’ll agree that medical costs are significantly higher than they’ve ever been. Therefore, an accident that has a bodily injury component to it has a much higher overall claim cost than it did just a few years ago. As I mentioned in an earlier column, my son was involved in an accident that resulted in a trip to the emergency room. After a few hours and several scans, we walked out with a bill in excess of $25,000. Luckily he didn’t need additional hospitalization or rehabilitation, but that would have added to the bill as well.
While I certainly understand the frustration that occurs with auto insurance rate increases, it’s worth understanding why insurance rates are on the rise. And since we know the cost to repair vehicles is rising and medical cost are increasing, this may be the time to review your insurance to make sure your insurance limits are keeping up. Talk to your insurance agent to find out if you are properly protected.
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