For the first time in a year, car insurance rates are on the rise, according to a study by Insurance.com, the largest online auto insurance agency in the United States. The company expects auto insurance rates to continue to move up at least through 2008, which means consumers will need to be even more savvy shoppers as they try to keep their car insurance rate low.
The study analyzed lowest auto insurance quotes to consumers from more than a dozen insurance companies during the first quarter. Insurance.com’s quarterly Car Insurance Rate Report found that the lowest car insurance quotes, on average, increased 1.05% over the previous quarter, rising from $1811 per year to $1830 per year. This increase marks the first time in a year that rates have inched up. Rates fell or held steady in 2007, marked by a 5.2% decrease in auto insurance rates in fourth quarter compared to the same period the year before.
Car insurance rates vary by state, and some states experienced rate quote increases in the first quarter that were many times greater than the average. Florida and Ohio, for example, saw rates jump 6.6% and 4.8%, respectively.
“While some of the rate increases we are seeing in the first quarter are relatively small, they represent a turning point for auto premiums, which had been holding steady or declining over the past four quarters,” said Dave Roush, CEO of Insurance.com. “We have seen all of the major auto insurance carriers reporting an increase in the average amount paid on bodily injury claims, fueled by rising medical costs. Historically, this factor has signaled the beginning of a national upward trend in rates, and we think we’ll continue to see rates bump up through 2008 and maybe into 2009.”
To be sure, individual states, companies or industry groups might report annualized increases that are still quite small, as their data reflects the past 12 months, when rates fell or held steady. The Insurance.com data, however, is real-time, representing the real-world experience of consumers who have gotten an online or phone quote for auto insurance in the last 3 months.
Industry experts have long observed that the property/casualty insurance industry is cyclical in nature, with periods of soft market conditions, during which premium rates are stable or falling and insurance is readily available, followed by periods of hard market conditions, where rates increase and coverage may be more difficult to find. The last time the auto insurance industry experienced such a challenging market, characterized by increasing rates, was from 2001 through 2004.
Among the top 10 states seeing the sharpest increase in car insurance rates in the 1st Quarter were Florida (up 6.6%), Ohio (up 4.8%), Pennsylvania (up 4.2%), Georgia (up 3.2%) and Texas (up 2.4%).
States seeing the sharpest decline in auto rates include Kentucky (down 7.6%), Maine (down 5.5%) and North Dakota (down 4.3%).
The most expensive auto insurance quotes were in Louisiana ($2674), Washington, DC ($2515), and New Jersey ($2499). These annual rates were twice as high as those quoted to drivers in Wisconsin ($1237), Iowa ($1276) and Ohio ($1278).
“Insurance costs generally represent about 5% of the full cost of operating a car, so increases in car insurance rates — on top of rising gas prices — will hurt consumers across the board,” added Roush. “This is the perfect time to comparison shop and take advantage of every opportunity to save money. There are some very good strategies that consumers can follow that potentially add up to hundreds of dollars a year in lower rates.”
Money Saving Tips
Time-tested tips like maintaining good credit, driving safely, and upping your deductibles remain valid strategies for lowering your auto insurance rate. Here are some additional, off-the-beaten-path money-saving suggestions for consumers looking to minimize the impact of increasing auto rates.
Earn an early shopping discount
Many auto insurance companies offer discounts to your premium if you shop well in advance of your current policy expiration date. If you were considering switching companies, and give your new auto insurance company enough notice (usually two weeks) before your current policy is up for renewal, you might receive significant savings on your new policy.
Look for “good student” discounts
Some auto insurance companies offer discounts to policies with teen drivers if they have a B or better grade average at school. Of course, proof of those good grades is required, but good students can sometimes help parents save as much as a 10-15% on car insurance.
Take a defensive driving course
Some companies offer a discount for a Defensive Driving Course, usually if taken within 3 years. So, you’ll get a double bonus — you can learn ways to avoid accidents — and save money on your car insurance at the same time.
Shop for auto insurance before buying a car
The cost to insure different cars can vary as much as the cars themselves. Insurers base premiums on a number of factors including crashworthiness, repair costs and theft rate.
Data about each measure is available from the Highway Loss Data Institute at http://www.iihs.org.
Comparison Shop — Online
Comparison shopping online can save you time and money. The key to shopping online is to know when you’re getting a “quick quote,” which is just an estimate, and a real, bindable online auto insurance quote. There can be a big difference between an estimate and the final rate you are charged. Insurance.com provides consumers with real-time accurate, comparative and bindable auto insurance quotes from over a dozen leading insurance companies, and the ability to buy a policy quickly online.
Learn more by viewing the Insurance.com Car Insurance Rate Report at www.insurance.com.
ABOUT THE CAR INSURANCE RATE REPORT
Insurance.com’s latest Car Insurance Rate Report highlights the lowest average car insurance rates quoted to consumers visiting Insurance.com in the first quarter of 2008. The rates consumers viewed, but didn’t necessarily purchase, come from auto insurance quotes consumers received as they shopped and compared rates from over a dozen of the nation’s leading auto insurance companies. Over the course of a year, Insurance.com provides online car insurance quotes to more than 1 million people visiting the website. While the Car Insurance Rate Report is a broad indicator of pricing activity in the personal auto insurance marketplace, it is not a comprehensive index as it reflects only the quotes of carriers that have participated in the Insurance.com platform in the states where it quotes (all states except Alaska, Hawaii, and Massachusetts).
Insurance.com is the leading online independent auto insurance agency in the United States. Consumers can instantly compare quotes from top auto insurance companies by completing one application at our website, www.insurance.com. To buy a policy, consumers have the option to complete the transaction online or speak with a licensed agent. Our innovative technology links directly to the rating systems at 15 major insurance companies, streamlining the shopping process for consumers and enabling companies to attract new customers through real-time underwriting and quoting.
In addition to providing comparative quotes at Insurance.com, the company provides white label auto insurance solutions to financial institutions, affinity groups and online marketplaces. Other products include life, health and home insurance as well as travel, dental and pet health insurance. Founded in 2000, Insurance.com is based in Solon, Ohio.