Andy Anderson and his wife, Kris, claim to be safe drivers who have no citations or insurance claims. So the couple was taken aback when their insurance costs for their two automobiles increased by 53%. “There are no other modifications. Excellent driving records. “There are no claims,” Andy told On Your Side. “And then, just like that, boom!” It increased by almost a thousand dollars. And all you do is scratch your head.”
Andy’s policy went from $2,031 to over $3,114 a year for two cars. “As soon as I saw that number $3,000, I thought, ‘Geez, I hope this is a mistake.’” But it wasn’t a mistake. And one of his insured vehicles is a 20-year-old pickup. Turns out, Andy isn’t the only driver with sticker shock.
The U.S. Bureau of Labor Statistics indicates that auto insurance has gone up 17% this past year. So, what’s driving up auto insurance rates? For starters, natural disasters. “Well, it really is a collision of a number of remarkable events, not to mention more extreme weather,” said Mark Hamrick, the senior economic analyst with Bankrate.
Mark tells On Your Side that a number of natural disasters, including hurricanes and wildfires, have damaged countless autos around the country in recent years. And that was more than insurance firms had anticipated. “All of these things are causing more damage to automobiles,” he said. “Think about how a large flood can take out an entire community, and that can take out a whole lot of cars. We’re talking about a flash flood or a fast-rising river.”
In addition to natural disasters, vehicles are just more expensive to repair, and insurance companies are passing those costs on through higher rates. Mark said, “Think about how, for example, a rearview mirror that has a camera in it or some other sophisticated electronics cost a lot more to replace.”
Finally, when COVID-19 hit, more people worked from home, which meant less cars on the road, which was a positive thing. Fewer cars resulted in fewer collisions, which resulted in fewer claims. Those workers are now back on the road, and their driving habits appear to have deteriorated. “It’s quite palpable how more dangerous drivers are behaving around here, and anecdotally, I hear that from family and friends elsewhere.”
However, drivers like Andy believe it is not adequate. Driving without any citations or claims should result in benefits such as decreased insurance prices. Instead, insurance premiums are rising. Andy claims that during his most recent call with his insurance carrier, he was told: “I’ve checked everything out. No records and no claims. But it is what it is. This is a general increase,” he remembers the insurance representative telling him.
Check to see whether you’re paying too much for auto insurance. Every year, consumers should shop around and see what other companies charge. Also, make certain that you are not paying for anything that you do not require. Finally, consider raising your out-of-pocket maximum. Lower rates are associated with a bigger deductible.
On Your Side also contacted the Arizona Department of Insurance about the increase in auto insurance prices. We asked if they were aware of any proposed vehicle rate increases by insurance firms and if the agency was required to approve such increases. The agency responded as follows:
