You just traded in your older car perhaps a 2005 or so, and purchased or leased a new 2017 vehicle with all the latest safety features in it. You call your insurance agent who informs you that to insure this vehicle the insurance premiums will be increasing substantially. You ask why? I have the latest safety equipment on the market shouldn’t it be cheaper to insure? It’s safer.
Well, the simple answer to this question is it costs a lot more to replace this new safety equipment when damage then it cost to repair your older vehicle. For example, vehicles sold with collision-mitigation technology according to WardsAuto.com estimate that it costs insurance carriers substantially more to fix say a side view mirror that in years past. Allstate Insurance gave a cost to replace a standard mirror on a 2015 Mercedes-Benz ML350 of $166 but the repair bill balloons to $925 if the mirror has collision-avoidance technology. On another popular vehicle, the Lexus RX 350 the mirror with collision-avoidance technology cost is $840.00 vs $390 for the standard mirror.
Car insurance premiums reflect the insurance carrier’s costs for accidents and injuries so if it costs more to repair and replace damage parts due to an accident involving these new advancement devices the costs are past along to the customer. State Farm in October 2016 raise rates 5.9% which was the largest increase that they had taken since 2003 reflecting the cost to fund the costly repairs of safety laden vehicles. Will this be their last increase most likely not, as the costs continue to rise due to the number of accidents that occur each and everyday.
Another issue that the industry and society is dealing with is distracted drivers. People love their smart phones and driving an automobile is not going to stop many of them from using their phones while driving. Accidents which not only involve the repairing of their vehicles but most often involve injuries and the associated medical bills are substantial. It’s simple multitasking, is not safe in an automobile.
Finally, people are driving more with gas prices down substantially over the past few years people are taking to the road once again and according to the Federal Highway Administration miles driven by Americans rose by 2.8% to a record 3.2 trillion miles driven in 2016!
We here at Brewster Allen Wichert, Insurance see these increases from all of our insurance carriers and hear from our clients daily as industrywide rates have increased by 14% since 2014.
What’s a person to do? Well, first review your insurance policy with your agent, We have over 15 different insurance carriers to choose from and if one carrier’s rates are too high we have the ability to change insurance carrier to help lessen the impact of the increase. We look for ways to help lower your insurance costs by offering Driver Safety Classes which reduce your cost by 10% and even reduce the number of points on your license. Insurance rates will still be increasing for the foreseeable future until more of these safe vehicles with collision-avoidance systems get on the road. The National Highway Traffic Safety Administration estimates that more than 90% of all crashes are caused by human error! Maybe it’s time for automated vehicles.