“Why are my auto insurance premiums so high?”  ”Will my insurance rates go down if I purchase a newer, safer car?”  “Why doesn’t my good driving record lower my rates more”?

We often get asked questions like these - questions that deserve answers.  first, we should explain that the government regulates our industry very closely, while fees charged by auto repair shops and manufacturers, lawyers, doctors and hospitals are not highly regulated.  And fees charged by these service providers usually are a major factor in determining the cost of claims.

As you might expect, the cost of insurance is also influenced by the frequency of lawsuits and size of jury awards.  Costs associated with both these areas continue to rise.  For example, jury awards in four common injury categories (cervical strain, knee injuries, vertebrae fractures and wrongful deaths of adult males) have increased at a much faster rate than inflation.

Auto repair

Most cars are constructed using front wheel drive unibody design.  This type of vehicle is more complicated and expensive to repair.

Because there is no rigid frame, the damage caused by a collision travels farther through the structural part of the vehicle.  In fact, manufacturers design unibody cars to “crumple” in certain areas to absorb the impact forces and keep them away from the passenger compartments.

Today’s cars are made from specialized, high strength, low weight steel alloys, plastics and aluminum-and have considerably more electronic components.  All of these changes have required body chops to invest substantial sums of money in training and new equipment.

As a result, these advancements in technology have lead to increased costs for motor vehicle maintenance, repair and bodywork.

One must consider the relative cost of repairing a car compared to purchasing a new vehicle.  Rebuilding a five -or four year old vehicle could be close to or more expensive than purchasing a new version of the same car, depending on the amount of damage.

Fraud and theft

Other factors contributing to higher insurance rates are theft and various forms of fraud, such as staged accidents, phony thefts and nonexistent repairs.  Fraud costs insurance companies some $17 billion yearly, according to the National Insurance Crime bureau - and accounts for between eight and 10 cents of each Auto insurance premium dollar.  Industry experts estimate that total costs can run as high as 25 cents of each auto insurance premium dollar in some states.

Inflation

In setting realistic rates, insurance companies must take into account not only the inflation affecting everyone else, they must also attempt to predict and accommodate the inflation which will affect claims yet to come.

Many of the claims we pay include medical and hospital costs.  Like vehicle repair and maintenance costs, these too have increased over the years.  In turn, those increased costs influence your insurance rates.

In addition, we retain attorneys to defend legal actions brought against you.  The costs of litigation and its effects on the affordability and availability of insurance have led many states toward enactment of various types of tort reforms, including No-Fault Auto insurance.