Throughout my 25-year insurance career, I cannot tell you how many times I have been asked, “Why is my auto insurance so expensive?” As a result, I have had numerous opportunities to try to explain the factors that affect auto insurance rates.
From an industry standpoint, the amount of money paid out in claims has a significant impact on rates charged to keep the company competitive in the marketplace and remain a profitable business. People love technology and all the advancements made to automobiles, but with those comes a significant increase in the cost of repairs. The more “bling” on the vehicle, the more “cha-ching” for repairs.
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Another factor is the growing population of North Carolina, which means more drivers and vehicles on the road and an increased frequency of accidents. Other considerations that result in a higher volume of accidents are distracted drivers, driving greater distances to and from work, and people using their personal vehicles for business purposes such as Uber, Lyft, Grubhub, etc. Increased time in a vehicle increases the likelihood of being in an accident.
Rate Factors on Auto Insurance
Sometimes, higher rates are my fault. Insurance points can be assessed to your personal auto policy due to moving violations on your driving record or accidents caused by negligence. The more serious the moving violation or the higher the property damage or bodily injury cost resulting from an accident, the greater the surcharge assessed on your auto insurance and the higher the premium.
One of the biggest factors that plays into the competitiveness in the auto insurance industry is discounts. Discounts are filed by insurance carriers with the U.S. Department of Insurance to apply deviations from the base insurance rates allowed by law. Some examples of deviations or discounts available include driving experience, bundle discounts for having auto and home insurance with the same company, full pay and tiered discount percentages based on credit score. Types of and discounted premium percentages will vary among insurance companies.
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Auto rates are going to fluctuate annually based on the reasons above, so I focus on what I can control to help keep my rates as low as possible. I try to be a good, defensive driver to avoid tickets and accidents. I carry my auto and home insurance with Farm Bureau and I monitor my credit score. My advice is for you to do the same and to reach out to your local Farm Bureau agent for a periodic review to make sure you are getting the best coverage for the lowest cost.
Visit ncfbins.com for more information about home and auto insurance.
