Auto insurance rates climb as number of cars, distractions rise

Car insurance prices have been on a rocky road.

According to The Zebra, an insurance comparison website, the national average cost of car insurance this year is $1,427, a 20% increase from 2011. State by state, the smallest increase took place in North Carolina, the biggest in Michigan.

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While low oil prices and an increase in jobs have been a boon for Americans, they’ve also led to more cars on the road and a higher frequency of accidents. The result: Insurance goes up. This is especially true in urban areas, where the populations are higher.

“Premiums are going to be determined by frequency and severity of accidents,” said Rob Hoyt, a professor of risk management and insurance at the University of Georgia. “If we think about what’s driving the increase now … it’s probably those things.”

In addition to their rising numbers, the vehicles themselves are changing, with more technology loaded inside, which lifts the price of the vehicles. That becomes another factor boosting insurance rates.

More technology also increases instances of distracted driving, which claimed 3,477 lives in 2015, according to the National Highway Traffic Safety Administration. Around 391,000 people were injured as a result of focusing on something other than the road, the agency reported.

According to the Brain Injury Society, those caught distracted while driving had their insurance raised an average of 16% last year. 

“Insurance, for people with cars, is a compulsory product,” said Kyle Nakatsuji, chief executive officer of Clearcover, an auto insurance start-up. “And there are a bunch of people in the U.S. who are paying too much for car insurance and have no idea.”

Although prices are on the rise nationally, there are several things consumers can do to lower their individual rates:

Shop around

Just because you’ve been with one company for years doesn’t mean you should stay there. Often, the deals that were in place when you bought the insurance don’t stay in place over time. The Zebra recommends looking into car insurance premiums every six months to a year to make sure you’re getting the best deal.

Research reward programs

Some insurance companies allow customers to earn rewards for achieving milestones, such as maintaining a clean driving record. “Allowing the insurer to monitor your driving will be rewarded by some insurers, assuming you are generally driving in a safe manner,” said James Carson, professor in insurance at the University of Georgia.

Shop in bulk

A lot of companies offer discounts if their customers bundle home and auto insurance. For example, companies such as Progressive and Allstate sell auto insurance in addition to home insurance and even motorcycle and boat insurance, all of which could be tied together.

Check your other insurance

Other factors could raise car insurance rates, such as your credit score or the cost of your health insurance. For example, car insurance companies consider that drivers may have high health insurance costs, which could impact how much the company would have to pay in the case of an accident.

Look to the future

Technology, such as driverless cars, could be our saving grace. With the potential for human errors, insurance costs could go down. Although Hoyt doesn’t believe completely autonomous vehicles will exist until far into the future, the possibility is here now.