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Insurance Rates On The Rise: Increased Medical Costs, High Vehicle
Repair Costs, Jury Awards, Fraud Among Reasons
NEW YORK, Aug 22 / -- In a bad news, good news
scenario, rising costs of medical care, vehicle repair, jury awards,
automobile theft and fraud are expected to drive up auto insurance
rates by six percent in 2004, according to an analysis by the
Insurance Information Institute (I.I.I.).
The good news is that projection is 2 percent less than the
anticipated increase of 8.5 percent for 2003.
Still, in two years an almost 15 percent increase in rates
can be tough to take along with the rising gas prices. So what’s
causing the increase and is there anything you can do to lower your
"Rising claims costs continue to fuel increases
in auto insurance nationally," said Robert Hartwig, senior vice
president and chief economist of the I.I.I.
"It costs more to repair cars; particularly following
accidents involving sports utility vehicles.”
Medical costs have played an important factor in the
auto market. Each year
there are more than two million car accidents involving injuries.
Typical costs for treating an auto accident victim range from $6,000
to $9,000, but can easily run into the tens of thousands of dollars.
Sharply higher jury awards in vehicular liability
cases are putting additional upward pressure on auto insurance
rates. The average jury award in auto liability cases rose from
$187,000 in 1994 to $323,000 in 2001 – an increase of 73 percent,
according to the most recent available data from Jury Verdict
"Auto liability issues are much more important
than people realize," noted Hartwig.
"About 60 percent of auto premiums paid in 2002 were for
theft is another major factor that affects rates.
According to preliminary data from the Federal Bureau of
Investigation's Uniform Crime Report, the number of auto thefts rose
by 1.2 percent in 2002, after increases of 5.7 percent in 2001 and
0.7 percent in 2000.
What individual drivers pay for insurance coverage
varies by state, by insurance company and by motorist. Factors that
influence the cost of coverage might include: the type of car and
specific safety features; amount
of miles driven and type of driving; family claim record, including
the number or severity of accidents; driving record, including
speeding tickets; age, sex and experience of driver, credit score.
What can you do to reduce your costs?
Suggestions from the I.I.I include:
Raising your deductible.
Higher deductibles on your auto could save you 15-30 percent
Compare insurance costs before buying a car. Your premium is based in part on the car's sticker price, the
cost to repair it, its overall safety record and the likelihood of
theft. Many insurers
offer discounts for features that reduce the risk of injuries or
theft. Cars that are favorite targets for thieves cost more to
Reduce coverage on older cars.
Consider dropping collision and/or comprehensive coverage on
older cars. It may not
be cost-effective to continue to buy this coverage on cars worth
less than 10 times the amount you would pay for the coverage.
Consolidate your policies. Buy home and auto
policies from the same insurer.
Some companies that sell homeowners, auto and liability
coverage will take five to 15 percent off your premium if you buy
two or more policies from them.
Maintain good credit.
Increasingly, insurers are using credit-based insurance
scores to determine auto coverage premiums.
This is because people with good credit tend to file fewer
claims. All else being
equal, a person with a good insurance score will pay much less for
insurance than someone with a poor score.
around. Get at least
three price quotes. You
can call companies directly or access information on the Internet.
Your state insurance department may also provide comparisons
of prices charged by major insurers.