Rich Howes: Hey, it’s Rich Howes at the Howes All State insurance agency here in Orlando and Oviedo, Florida. Wanted to answer another question for you that I get oftentimes. It’s why do auto insurance premiums increase? Well, we’ll go through a few reasons. One, when the economy is good and we have low gas prices, there’s a significant amount of more miles being driven. Of course, more miles means more accidents. Not to mention, these miles being driven often include a cellphone in front of somebody’s face. So distracted driving is a huge, huge reason.
Also there are newer cars on the road. The new cars come with improved technologies. What used to be a very inexpensive bumper repair for $500 might be a $5,000 bumper now that it’s got back up cameras in it, things of that nature. I have a live example. In 2015, the front emblem on a Toyota Camera was $51.24 to repair. A year later, in 2016, that emblem now has a collision avoidance sensor. New cost, $965.58. That’s 19 times the cost.
Also, rising healthcare costs. We don’t just fix your car, we fix you or the person you potentially injured. And so when the medical costs increase, so do the payouts that are a part of an auto insurance with liability and PIP insurance.
Also the number of claims represented by attorneys is much higher, and that has an impact on claim severity payouts. So I’ll ask you a question, how many of you know an attorney by name, simply from a billboard you might’ve seen? I think we know the answer.
So those are the main reasons that auto insurance goes up. I hope that’s been helpful, and I appreciate it. Have a good one.