The total number of miles Americans drive is at its lowest point in decades, with many of us driving as little as possible in order to save gas, but auto insurance rates continue to rise.
Fewer cars on the road mean fewer crashes, but according to the New York Times, "Many insurers are raising their rates, sometimes by large amounts." Nationwide, the increase amounts to "an annualized rate of 1.7 percent so far this year," according to the Insurance Information Institute. But state-by-state, some increases are dramatically more. "North Carolina is pondering an industry wide request for a 13 percent increase. In Illinois, increases have been from 3 percent at State Farm to 13 percent at the United Services Automobile Association, which insures military families." And New York state Deputy Insurance Superintendent Michael Moriarty says "On average, [insurance companies] have been asking for a 7 percent increase” in his state.
Why would insurers be raising rates as the actual risk of the accidents they pay to resolve decreases? Kicking Tires explains, "Insurers point to the rising cost of raw materials -- everything from plastic to steel to paint -- as the source of the increase, but government regulators are skeptical. States that have heavier regulation tend to deliver better prices to consumers, and these states view the insurance industry as suspect when it says it wants to raise rates."
How can you protect yourself from rate increases? First of all, if you are one of the millions of Americans driving less this year, let your insurance company know. Altering your policy to reflect your actual driving habits can bring your costs down. You could also consider signing up for a program that allows your insurance company to track your driving habits, which might lead them to offer you a discount -- or raise your rates if you aren't careful.
For a few more techniques to save money on car insurance, see our What You Should Know About Car Insurance article.
Perhaps you should also stay away from New Jersey. GMAC Insurance says the worst drivers live there.
Research the safest cars in every class with U.S. News' car rankings and reviews.
