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What's Behind Your Auto Insurance Quotes?

Automobile-related expenses rise year after year, causing auto insurance quotes to soar in response.

Rising medical and legal costs, sharply increasing vehicle repair prices, theft, fraud and drunk driving all contribute enormously to what you pay to insure your car. These are the principal drivers behind high auto insurance rates today, according to the Insurance Information Institute (III).

Let's examine these issues and their related costs further.

Medical and Legal

Each year, more than two million automobile accidents result in injury. Typical costs for treating an auto accident victim range from $6,000 to $9,000—but can easily run into the tens of thousands of dollars, says the I.I.I. In addition, the U.S. Department of Transportation estimates that accident-related deaths cost our society more than $150 billion every year.

Related legal expenses drive rates even higher, with auto liability payments rising 44 percent in 2000. In addition, jury awards for vehicular liability sometimes approach outrageous sums today.

Vehicle Repair

Automobile technology, construction and design advancements have accompanied auto-damage liability increases in recent years.

Depending on the type of car you purchase, high repair costs may be inherent—which also means higher auto insurance quotes. The cost of manufacturing and repairing vehicles with innovations such as lighter, smaller construction and thinner glass has negatively impacted auto insurance quotes and prices.

In addition, many consumers choose to add rental car coverage to their auto insurance policies, adding further to the price insurers must pay to get them back on the road.

Theft

Vehicle theft sometimes seems rampant. The III estimates a motor vehicle is stolen in the United States every 24 seconds.

Auto theft is covered under the comprehensive section of your auto insurance policy. Risk of loss—or the likelihood that your car will be stolen or damaged—determines the price you pay for this type of insurance.

The dollar amount for claims filed due to theft shows, in part, the higher value of new cars on the road. These newer vehicles become targets for thieves; and, because they cost more to repair when subsequently involved in an accident or stolen, are also associated with higher auto insurance quotes.

The National Insurance Crime Bureau (NICB) recommends a multi-layered approach to prevent auto theft:

  • Common sense—use your car's standard safety features regularly. Includes locking your car and taking the keys.
  • Warning device or alarm—activate and use to deter thieves.
  • Immobilizing device—use a fuel cutoff or smart key to prevent a burglar from being able to drive your vehicle.
  • Tracking device—allows law enforcement to track and recover your vehicle, if stolen.

Fraud

Fraud is the second most costly white-collar crime in America, costing consumers an estimated $30 billion annually, according to the NICB. The most common fraud schemes involve insurance and include bodily injury fraud, auto repair fraud, homeowners claim fraud and worker's compensation fraud. Higher auto insurance quotes are one result.

Auto fraud involves criminals who stage bogus auto accidents, then file insurance claims for payment. Not only is this against the law—it can cause injuries and even have deadly consequences.

Fraud is a major problem in some states, including New York, Florida and Massachusetts.

The NICB provides these tips for preventing auto insurance fraud:

—Avoid tailgating, allowing sufficient distance between your car and the one in front of you while driving.
—Call the police to the scene and file a report immediately when involved in an accident.
—Carry a disposable camera in your vehicle and photograph damages to your car and occupants of the other vehicle if a mishap occurs.

Note: InsureMe's online auto insurance quoting service verifies its referring agents' licenses in order to protect you from fraud.

Drunk Driving

Impaired driving will affect one in three Americans, according to a study by the National Center for Injury Prevention and Control (NCIPC).

Alcohol-related crashes kill someone every 31 minutes and non-fatally injure someone every two minutes, making them one of the largest contributors to high auto insurance prices. In addition, these accidents cost the insurance industry about $51 billion a year, translating into high auto insurance quotes for the consumer.

Although the risk of being involved in a car crash of any type is greater for young people than for the elderly, death or injury from impaired driving does not discriminate between victims. So avoid drinking and driving to keep everyone safe on the road and lower your auto insurance quotes.

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