My Car is Getting Older Every Year

Has this ever happened to you?  You get the mail and notice that your have a letter from your insurance company.  “It must be time for new insurance cards,” you think to your self as you start to open the letter.  And along with your insurance cards, you see the premium notice as well.  And it looks like you are going to be paying more than last time…again!

Drivers that have a clean driving record with no tickets or accidents, feel like they should be getting a better rate as time goes on, which makes sense.

I get frequent calls from clients that say “Why are my car insurance rates going up, even though my car is getting older by the day?”

Great question. And one that can be explained.

Recently, I’d say within the last 18 to 24 months, a trend that we are seeing with our clients is an increase in two coverages on their auto policies…Bodily Injury (liability for the other party) and Property Damage.

Bodily Injury Coverage

If you are in an accident, this the coverage that pays for the other person(s) that may be injured.  Bodily Injury, or liability coverage, will cover expenses related to an accident, including medical bills, physical therapy, time away from work, and legal representation if it would come to that.

As most of us can attest to, the cost of medical expenses is only going one direction…up.  An ambulance ride from the scene of an accident, surgery if needed, hospital stays, meds…  It all adds up, and fast.  

So, even if you have been accident free for many years, this is one coverage on your policy that is likely increasing from year to year.

Legal represenation, or attorney fees, are another expense that have increased over the years.  If you are in an accident and the other party sues you for lost wages, or pain and suffering for example, your insurance company will provide an attorney to represent you in the case.  These attorney fees are paid for by your bodily injury coverage.

Property Damage

Of the two coverages mentioned here, this one may likely be the culprit for your increased in insurance cost.

Technology has made the driving experience completely different in the last two to three years. With the advanced safety features that are included in most of the newer vehicles, a drive down the interstate involves more dings, bells, whistles, and the occassional seat buzz, than ever before. This advance in technology has made vehicles safer to drive.  Heck, the car may even take over for you if you aren’t reacting soon enough!

There have been many times in recent months that I have had clients call in to let me know about their vehicle upgrade, only to be pleasantly surprised when I tell them that the new premium is not that much more, maybe even LESS than what they were paying previously.

Safer Driving Vehicles = Less Accidents = Less Claims Filed (at least statistically)

But while the cost to insure a vehicle may be about the same or less, the cost to repair a vehicle, both new and old, has gone up.

The days of popping out a dented bumper or corner panel to minimize costs are gone. Instead, a whole new part must be ordered. Ordering parts, and the labor involved to replace a whole part, is more than it was before.

The cost for repairs on a vehicle are increasing at a steady rate.  It doesn’t take a lot of damage to total a fairly pricey estimate from the body shop.  

Essentially, the shop is having to order all new parts for repairs.  So, instead of knocking out the dent in a bumper, the shop is having to get a whole new bumper shipped out.  Then, they have the labor involved in removing the damaged one and replacing it.

And that is where is technology piece is starting to have a greater impact on cost.  If you have a newer vehicle and the bumper that is being replaced includes warning sensors, the part cost will increase, as well as the amount of time that is needed to replace that part.  

And after the parts are replaced, there may be the need to have the new equipment and sensors calibrated so the vehicle will work correctly.  Here is an article from AAA that gives some details about how even minor repair bills can double in cost because of the Advanced Driver-Assistance Systems (ADAS).

The ADAS that is included with many new vehicles today help with options like lane assist and collision warnings.  While these are great features when it comes to safety, they can also cause repairs to be more costly.

Even the windshield in newer vehicles is becoming more expensive to repair and replace.  According to this article on the Kelly Blue Book wesbite, a new windshield alone could run you over $1,500!  

Other Factors

Truth be told, there are even more factors that a company will use to determine the premium for auto insurance. And every individual policy is different. No two households, or people for that matter, are the same.

Most know that a speeding ticket or At-Fault Accident will cause an increase in your premium when the policy comes up for renewal. If you have things like “Accident Forgiveness” or “Minor Violation Forgiveness”, you may be able to get these incidents waived.  You have a limited amount of uses when it comes to these coverages…and you are paying extra to have this feature on your policy in most cases.

One other determining factor that most likely won’t show up in the fine print on your policy is the fact that there is still a large number of Distracted Driving accident on the roads today. You can check out this website from the Nebraska Safety Council for more information. While some of the statistics on this website are dated, you can get an idea of how big a problem distracted driving can be.

Save If You Can

So what can you do if you feel your car insurance rates are higher than they should be?

One option is to get in touch with an independent insurance agent to have them go to work and see if they can find you a more competitive option. While many companies are seeing increases in coverage, that doesn’t mean there might not be a better rate with another company. An independent insurance agent works with many companies, so by making one phone call, you can get mutliple quotes.

Another option, which has become more popular in the last couple years, would be to take advantage of your current insurance companies “telematics” program. “Telematics” is a fancy term for having your driving habits tracked for a period of time.

While you may be hesitant, at least take the time to do some reasarch on the type of program your company utilizes. Some companies have you download an app on your phone (which is becoming the standard method), while others will mail you a device that you can plug into your vehicle.

The time period that each company will require for you to track your driving will vary, anywhere from 90 days to the lifetime of your policy with them.

But this is a way to earn a discount for good driving habits, and it also allows you to “personalize” your policy premium, by showing your insurance company that you practice safe habits, and should be rewarded with a lower rate.

I actually just took advantage of this option on my own insurance policy.  We recently added a young driver, so we are both trying it out.  I am hoping that she can become more aware of her driving habits (even though they are already pretty good), as well as helping us save on our insurance premium down the road.  

Most telematics track four factors when it comes to your trips:  Acceleration, Braking, Speed, and the Time of Day you are driving.  And with those that use an app, you can see you progress along the way, and make corrects if you need to so you can work to get the best rate possible.  

Here is a screen shot of my current status…obviously, I need to take it down a notch on the cruise control.  In all honesty, I don’t speed that much, be even a mile or two over can effect your score.  

Conclusion

Insurance companies use many different factors when they determine insurance rates. Each company in each state will have different rates, and then when you add that to specific policy holders, it can get complicated.

No one likes it when their insurance premium goes up at renewal. My hope is that this helps explain why your rate may be going up, while giving you some options to help lower your premium. 

At the very least, if you see me out you can tell me to slow down while I’m driving…