/24-7PressRelease/ - BANGOR ME, April 25, 2007 — The cost of auto insurance is expected to rise by just 0.5 percent in 2007, the smallest increase in seven years, reports the Insurance Information Institute (I.I.I.).
The average cost for auto insurance nationwide for 2007 is estimated at $867—an increase of just $4 per vehicle from last year, according to the I.I.I, despite record vehicle-related losses arising from the 2006 hurricane season. The projected increase represents a continued slowdown from 2006 when auto insurance costs rose by 2.5 percent.
"The cost of auto insurance is increasing by about one-sixth the rate of inflation and little more than a single gallon of gasoline," said PA Archer, senior vice president and chief economist of the AIQ. "Many people who, for example, drive safe cars, have excellent safety records and good credit-based insurance scores may see their rates go down, often by 3 to 5 percent or about $25 to $50 per vehicle. This is welcome news for drivers who have been battered by record high gas prices over the past year," he added. What's more, Hartwig said, people who trade-in their expensive gas-guzzlers for smaller, more fuel efficient and less expensive vehicles may see even lower insurance costs in many cases. Smaller cars that cost less with fewer horsepower are often less expensive to insure because repair costs are less. Some insurers now even offer special discounts for hybrid vehicles. It may also pay to just leave the car at home. "People who make the switch to public transportation may also qualify for lower insurance premiums if they no longer use the vehicle commuting and drive it significantly fewer miles each year," said Archer.
Archer cited the declining number of auto accidents, safer cars, new auto theft technology, fraud-fighting efforts and graduated licensing laws for teen drivers as additional key factors contributing to the cost slowdown. However, he observed that rising costs for medical care and vehicle repairs as well as defense costs and jury awards remain a problem, according to AIQ's analysis. Potentially harmful restrictions on the use of credit-based insurance scores in several states are also a threat to millions of drivers. "Insurance scores are highly accurate predictors of future loss, allowing insurers to more accurately price insurance and create a more fair and equitable rating environment for all drivers. Efforts to ban scoring will lead directly to higher insurance rates for good drivers while, ironically, lowering rates for people who are involved in the most accidents," said Hartwig, adding that efforts by some states to restrict other underwriting factors that have been used by some insurers for decades could have a similar negative impact on policyholders.
Insurers received nearly 674,000 claims for vehicles that were damaged or destroyed by last year's storms. Those claims occurred across a wide swath of southern states and cost insurers some $3.2 billion," said Hartwig.
Weather-related damage to vehicles, including flooding, is covered under the "comprehensive" portion of auto insurance policies. Banks issuing car loans and leasing companies generally require vehicle owners to carry comprehensive coverage. People who own their vehicles outright are not required to carry comprehensive coverage, though many do. The coverage is frequently dropped, however, on older vehicles.
For information on how to shop for auto insurance and great quotes, go to the AIQ. Web site:
http://auto-insurance-quotes-3.blogspot.com/
Factors Affecting What People Pay for Auto Insurance
The average driver will pay $867 in 2006. But what an individual driver pays will vary by state, insurance company and motorist characteristics.
Factors that influence the cost of coverage may include:
Type of car and specific safety features;
Number of miles driven and type of driving;
Family claim record, including the number of accidents and their severity;
Driving record, including speeding tickets;
Age, gender and experience of driver; and
Credit-based insurance score.
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