Think you pay too much for car insurance? Your auto insurance premiums probably increased earlier this year. Rates will soon go even higher. Even if you’ve had no recent tickets or accidents, you could see your premium increase.
Car insurance rates tend to increase by 3 or 4 percent each year due to inflation. However, in December 2016, the increase from the previous year was twice that amount, premiums went up an average of 7 percent. Even with a clean driving record, it’s not uncommon for a motorist to pay close to $900 for six months of coverage. If premiums continue to rise at this rate, $1,000 premium payments could be a reality in just a few short years.
Why Are California Auto Insurance Rates Increasing So Much?
Car insurance companies are losing money. In fact, car insurance companies are expected to lose $154 billion this year. In order to remain profitable, they must collect more money by raising premiums.
It’s becoming harder and harder for insurance companies to make money. With profit margins decreasing, many companies are going out of business. This creates less competition, which allows remaining insurers to raise rates even more.
More Cars On California’s Roadways
Insurers are seeing more claims, with the number of accidents rising by almost 4 percent from 2014 to 2015. There are more cars on the roadways than ever before thanks to a low unemployment rate. More cars on the road means more accidents.
New Car Technology Leads To Expensive Repair Bills
The claims are also becoming more expensive as car technology continues to change and innovate. Cars are now equipped with heated mirrors, bluetooth, cameras, entertainment systems, sensors and other costly parts. Many of these items make driving safer, but can result in costly repair bills. Both of these factors have resulted in significant cost increases for insurance companies and the costs are passed on to customers.
Rising Cost Of Healthcare
Not only are car insurance rates rising, but so are medical bills. Between November 2010 and November 2016, healthcare costs rose by more than 32 percent. In the event of a car accident, your auto insurer is the one who would pay the medical bills – not your health insurance company.
With Rising Premiums Comes More Uninsured Motorists
These huge premium rate hikes are likely to lead to more uninsured motorists on California roadways. In California, there are already close to 15 percent of drivers without insurance. As California auto accident lawyers, we continue to see an increasing number of motorists who are uninsured because they simply cannot afford the cost of insurance.