What Do You Think A Competitive Automobile Insurance Premium Should Be?

Hand with money and toy carI recently read an article stating that three-quarters of American consumers believe that with no accidents and tickets, their annual auto insurance premiums should be somewhere between $250 to $500.

REALLY? Everyone knows that insurance is a business and nobody is in business to lose money!

So, I got to thinking and researching some of the statistics available regarding the cost of claims and how they might contribute to the current auto rates:

• In 2012, the average auto liability claim for property damage was $3,073.00;
• In 2012, the average injury claim was $14,653.00;
• In 2012, the average collision claim was $2,950.00 and the average comprehensive claim was $1,585.00.

For the same year, some of the more gruesome statistics indicated that:

• Injury from a motor vehicle accident was said to occur every 14 seconds;
• About 92 people died each day as a death occurred on average of every 16 minutes.
• There were over 2.36 million injuries total.

The cost to settle claims includes expenses such as:

• Legal bills, court fees, expert testimonies, procuring and evaluating medical bills, ordering police and other investigatory reports, loss of income, evaluation of pain & suffering, medical reviews, vehicle appraisals to mention only a few of the more common claims expenses.

It is reported that the average cost of a car in the U.S. in 2013 was $32,086.00

Last, but not least, we all know that there have been some very tough economic times from 2008 forward. Rising unemployment, offshore manufacturing, compression in the financial services industry, and continuing advances in technology, have all affected the American consumer in one way or another.

Shrinking auto sales and an increase in the age of all vehicles on the road haven’t helped keep consumer prices down. It is reported that, in 2013, 44% of all vehicles that were repairable were actually determined to be total losses because the cost to fix them was greater than their actual value.

Even as an insurance professional for many years, I found these figures to be very enlightening and I began to see why automobile insurance prices continue to rise in direct proportion to tickets, accidents, cost of transportation, rising crime, high rates of unemployment, the effects of litigation, and how this all contributes to our auto insurance premiums.

Most important, however, was the message that “ultimately we all pay the price.” That, in and of itself, should make us all mindful of our responsibility for safety when we get behind the wheel of a motor vehicle.

By Karen Skoler, CPCU

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