Why does my car insurance keep going up?

Let’s start by saying it’s not your imagination. The cost of auto insurance is on the rise. In fact, premiums have been rising faster than the rate of inflation since 2008 – with double digit increases predicted in many states this year.

(The good news? You can do something about it. Just skip ahead to the happy ending. We call it “Let’s Talk”!)

Why the increase? To cruise through the confusion, let’s look at some top factors.

Traffic, Texting and Twisters

Simply put, there are more accidents now. Cars have been getting safer over the past half century (think antilock brakes and electronic stability controls that “know” when you’re skidding) which paid off in a reduced accident rate … for a while.

But since 2008, the accident rate has been trending up, thanks to:

  • More cars on the road: An improved economy and lower gas prices have led to more people driving more miles.

  • Distracted drivers: As smart phones conquer the world, more drivers are paying attention to something other than the road. (We’re looking at you, Facebook. But not behind the wheel.)

  • Severe weather conditions: Worsening weather patterns from record tornados to inordinate flooding to significant storms drive up auto premiums through a spike in “catastrophe” claims.

The High Cost of Repairing, Healing and Suing

“Claim severity” is on the rise. Untangling the terminology, that’s what it costs your insurance company to pay off your claim. In other words, there are not only more accidents now … they’re high ticket items.

  • Body work: People have been buying more new vehicles since 2008. The downside of the fabulous tech that keeps your car safer? It’s pricier to fix.

  • Medical costs: Unfortunately, medical costs are also rising faster than the rate of inflation. That means it’s more expensive to pay off bodily injury claims.

  • Litigation: More people are lawyering up to settle their claims – which can result in higher payouts.

Blame it on the Bond Market

Low interest rates are good, right? Not necessarily for insurance companies.

Ready for a little inside baseball? For years, insurance companies were able to keep your premium low by investing their cash reserves in the bond market – which usually delivered a 4-6% return. But since the 2008 recession, interest rates have been historically low … going south of 2%.

This, too, drives up the cost of auto insurance.

Good News ... You Can Buck the Trend.

It’s still quite possible for you to lower – rather than ramp up – the price you’re paying for auto insurance now:

  • Comparison shop: When your policy is expiring, don’t automatically renew – look for a better deal from another carrier. (Full disclosure: we know a few people who rock finding the best value at the best price.)

  • Take advantage of discounts: Many drivers don’t know about all of the discounts they may qualify for. Depending on the carrier, these include price breaks for being a good student or safe driver – owning and insuring your own home – or not having an accident for 5 years.

  • Bundle auto and home coverage together: Many carriers offer nice savings for bundling auto and home coverage together. (Free bonus – you can manage two important policies in one place.)

Of course, the best way to keep your rates from rising is by doing everything you can to stay out of accidents in the first place:

  • Maintain your car: Follow the check-up schedule recommended for your vehicle and choose a reliable mechanic.

  • Drive like a boss: Did you know that only 2% of all auto accidents can be solely attributed to a bad car? The vast majority are driver fouls. So stay in control behind the wheel - and watch out for others who aren't.

If you’re shopping for more affordable top-rated auto insurance, call the friendly licensed agents at Mylo! We look forward to helping you out, even if you just want advice.

Or look around our site to learn more about Mylo and compare instant online quotes!

Thanks to the Insurance Information Institute for all the great info.

The right coverage for you? Surprisingly simple.