Auto Rates on the Rise
In Colorado and across the country driving frequency is returning to pre-pandemic levels and auto claims have increased in kind. In addition, costs have increased for insurers for auto repairs and replacing vehicles, and that has caused supply and demand issues for vehicles, parts, and labor.
A recent report from ValuePenguin, showed an 8.4% increase in car insurance in 2023, which is the largest rate increase in six years.
More than ever you want to be reviewing your Auto Policy. The parity in rates is significant in the industry. Working with a broker agency like ours allows you to sift through the differences in rates to get the best offer for your family. Our insurance partners are committed to being competitive and this helps you get the coverage you need for a great price. Moreover, working with expert licensed Agents can make a big difference.
Factors that determine your car insurance rate:
- Location: Carriers typically rate based on the claims activity for Zip Code, City and State. Different areas mean different risks, based on the carrier's claim experience. For example, theft rates and population density can affect auto crash rates.
- Driving record: Lapses in coverage, speeding tickets or other moving violation convictions, at-fault accidents, or drunk driving will make you a higher-risk driver. The higher your risk, the higher your premium.
- Credit score: Drivers with lower credit scores statistically file more claims, which leads to higher rates, according to a study from Bankrate. Nationally, drivers with excellent credit pay about 49% less than drivers with poor credit.
- Teen driver: Adding a teen driver with little driving experience can more than double your rate. Some carriers are more teen driver friendly than others.
- Type of vehicle: Typically, vehicles that cost more to repair or replace will cost more to insure. Some technology like automatic braking could make crashes less likely but would cost more to repair, which could shift costs in your policy breakdown. Electric vehicles require specialized parts and highly skilled labor to repair, which is likely to increase insurance costs as that market grows.
- Age of Vehicle: Age plays a role, but it's possible for an older vehicle to cost more than a newer vehicle because of the above factors. Before you buy a vehicle you should always ask your agent what the difference in the insurance will be. This will allow you to make a more informed financial decision.
Ways to help reduce your overall Auto Insurance Costs:
- Higher deductibles: Having higher deductibles will help lower premiums. However, understanding the difference between your out-of-pocket expense and the difference in premium is important.
- Telematics: Most carriers offer a 10%-15% discount to enroll in their mobile driving app that monitors driving behavior for a set amount of time. In addition, some even offer additional savings if your driving behavior was good (an additional 20%-30%) during the enrollment period. Some even extend those discount at Renewal, while others remove the discount completely at Renewal. Knowing who does what, will help you decide which carrier will fit you better.
- Discounts: Most discounts are automatically provided, but if you are able, there are discounts for Paying In Full. We encourage you to explore your billing options with your agency. You may be surprised by how many methods insurance companies offer nowadays.
- Pay Per Mile discount: Some carriers will provide insurance based on how much you drive. If you don't drive very much this will significantly lower your premium. However, when you do drive more it will increase your premium. More and more people work remotely, if you fit this box, this may be an option you should discuss with your insurance agency.