Will the premiums rise? Insurance

As we come up to 2011, everyone is looking into their crystal balls and trying to predict what will happen to premiums in the next year. According to the insurance industry, the rates have risen by about 5% over the last twelve months. At a time of high unemployment this has been hard. So, all the pessimists are predicting we will have increases as a continuing trend. What then are the factors the insurers will be considering? It seems the use of vehicles for longer journeys is falling slowly - less commuting, fewer holidays. This means there was a small percentage increase in the highway miles but significantly smaller than last year. The millions of unemployed people are driving less. Since the national unemployment rate has been steady at just under 10% for the last year, this hides the real extent of the problem. For starters it fails to count the actual people without work. It only counts the number claiming benefit. Secondly, it's only the headline. If you break it down by age, the young and the older workers are caught without work. Some states have significantly higher rates than others. Put this together and the unemployment rate is likely to remain stubbornly high for the next year, keeping ever more vehicles from the roads.

The insurers themselves admit there has been a drop in the number of accidents and, more importantly, this is a continuing trend. In part this is a result of the improving manufacturing standards. There has been growing pressure on those who design and make vehicles to incorporate more safety features. With a similar political pressure on the government to force more recalls when vehicles are suspected of being unsafe, this is reducing the number of people serious injured. This is fortunate because the other trend is the cost of medical treatment has continued to rise steadily. Worse, as the recession has bitten, the inevitable rise in fraud has begun to affect profitability. In some states, this is balanced out as tort reform has been reducing the number and value of claims.

This leaves you with the uncertainty. You start by getting the maximum number of quotes before deciding where to insure your vehicle(s). There's painfully clear evidence that staying loyal is not necessarily good for your bank balance. Although some insurers offer you a discount for renewing, others are offering lower rates and welcome discounts on top. You often benefit by being willing to change insurers. Whether this applies to you depends on the spread of the premiums in your state. Where you have a consumer-friendly Commissioner, the premiums will be more regulated and the advantages of switching may be smaller. But in states where there is little regulation, the differences in the premiums can be significant. As we always say in articles like this, shop around. Even in regulated states, auto insurance companies are in competition with each other. Stop being one of the 90% who renew on autopilot. Get as many auto insurance quotes as you can and spend the time to see what the market can offer you. It may not be cheap insurance, but it may be more affordable than you think.