Auto insurance premiums have been on the rise since April 2016, when a 6 percent rate hike made it the biggest monthly increase since 2003. While the need for harder conditions in the auto insurance market is overdue, both personal and commercial auto policies are noticing the effects. And due to contributing factors that include the high costs of claims, increasing costs of vehicle repairs and unsafe driving behaviors, policyholders are not likely to see a softer market any time soon.
More Drivers on the Road
Thanks to low gasoline prices and rising employment rates, more Americans are driving. As a result, there are more accidents, which lead to higher payouts. Higher payouts lead to higher premiums.
The cause of more accidents isn’t entirely because more drivers are on the road—it is because of drivers’ unsafe driving practices. According to the AAA Foundation for Traffic Safety, about 87 percent of drivers admitted to engaging in at least one risky behavior while behind the wheel in the first quarter of 2017, including using cellphones while driving and not wearing seat belts.
Adding to the causes of the hardening market is the increasing size of insurance claims—also known as claim severity. Three large drivers of claim severity include the increase in the costs of medical care, auto repair and auto parts. According to a recent study by CarMD, the largest repair cost comes from replacing the expensive technology that is common in newer vehicles, as body shops struggle to afford the special equipment and training required to perform the repairs.
Uninsured Motorists/Underinsured Motorist
Although auto liability insurance is compulsory in most states, approximately 13 percent of drivers drive uninsured. Unfortunately, it is the drivers who abide by compulsory insurance laws who end up paying the price—in the form of uninsured motorist coverage. According to the Insurance Research Council, uninsured claim payments have increased by 75 percent over the past 10 years, resulting in a $14 premium increase for every insured individual.
Even when compulsory insurance is purchase, the minimum level in all states leaves a coverage gap when the at-fault driver’s liability limits are too low to coverage your damages or medical expenses. In these situation, which are becoming increasing the norm, your insurance steps in (assuming you purchased uninsured/underinsured motorist coverage). This situation impacts the auto insurance companies’s entire book of business, which resulting in increasing premium for all their insured.
The Threat of Autonomous Vehicles
Although autonomous vehicles (driverless vehicles) have the potential to save lives and reduce injuries, they could also decrease the personal automobile insurance sector to less than 40 percent of its current size. While the change should be gradual, many insurers have been increasing rates by 5-10 percent in anticipation of the threat.
With auto insurance premiums on the rise for both personal and commercial policies, it is important to be aware of your options at renewal time. Contact us to help you keep your premiums as low as possible in a hard market.
EMERGE INSURANCE AGENCY
Posted on November 9, 2016 in Auto
Forbes reports that by the year 2020, there will be 152 million connected cars worldwide. Connected vehicles transmit wireless signals and radio waves, making them susceptible to thieves who can, among other things, hack into a car’s electronic ignition and steal the vehicle. They can also remotely take control of the vehicle away from its owner while driving, which can lead to a potentially dangerous situation out on the road.
Mercury Insurance recently connected with cybersecurity expert Craig Smith to learn how consumers can protect their vehicles against cyberattacks. The author of “The Car Hacker’s Handbook,” shared the following tips:
Note: Since these devices can increase the risk of a cyberattack, Mercury doesn’t use this technology to monitor our customers’ driving habits.
Placing keys in a metal drawer or refrigerator at night can help protect against this kind of hacking activity by blocking out or reducing the signal of the keys so that they aren’t transmitting when not in use. Parking in a well-let area will also help if you don’t have access to a garage.
How Hackable is Your Car? Enter your vehicle details in this infographic to see.
EMERGE INSURANCE AGENCY
Did you know that cybercriminals can break into your vehicle without even touching it? It’s a scary thought, but as vehicles become more connected to the internet, new vulnerabilities are allowing hackers to gain entry to – and even take control of – vehicles remotely.
This educational infographic lets you identity specific ways your vehicle may be at risk from hacking. ChecK your vehicle now by click the VULNERABILITY CHECK link below
With people getting in the kitchen for the holidays it’s important to be careful. According to property insurance companies' claims data, more fires resulting from cooking occur on Thanksgiving than any other day of the year. Studies show that the main causes of home fires are cooking fires, with November having the highest number of fires related to cooking, followed by December.
The states with the most claims for grease, and cooking related fires are California, Texas, Illinois, Pennsylvania, Ohio, New York, South Carolina, Georgia, Minnesota, and Michigan according to State Farm.
With the beginning of the holiday season it’s important to follow a few tips the stay safe cooking. Make sure when frying a turkey to do it outside away from anything flammable. The turkey should be completely thawed and dried before frying. Make sure you never leave the turkey unattended and keep a fire extinguisher close by.
Be safe and have a Happy Thanksgiving.
EMERGE INSURANCE AGENCY
Cecil Williams -