Observing the world around us is something we all do all the time, often unconsciously. Something as small as noticing that your favourite barista has new glasses or that the road has finally been repaved, or something more significant like modifying your commute time to account for heavier traffic.
The auto insurance market is also keeping an eye on things, particularly on patterns and variables that could affect prices for policyholders. For better or worse, you might not be able to understand the “why” behind a change in your auto insurance cost.
Insurance companies base their customers’ auto insurance rates on a variety of factors. The driving habits of American drivers, however, are something that insurers are aware of but don’t often discuss.
We’ll discuss how insurers are adjusting rates in light of the negative trends in auto accidents in the United States as well as how usage-based insurance might reduce premiums.
The rise in auto accidents in the United States.
According to the New York Times, fatal auto accidents in the United States were not widely recorded before to 2015. Why? Developments in vehicle safety, regulations requiring the use of seat belts, and a general decline in drunk driving were all contributing to the ongoing decline in dangerous driving practices.
However, the decline in fatal car crashes reached a tipping point and started to increase around 2015. Larger cars were on the road in the United States, and drivers were also speeding more. The number of accidents increased further, with a sharp spike following the pandemic in 2020 to the present.
The National Highway Traffic Safety Administration (NHTSA) projected that more than 9,000 people perished in auto accidents in just the first few months of 2022. This is 20% more than prepandemic figures, as reported by the New York Times. Since the 1940s, there has never been an accident rate as high.
Why have there been more collisions since 2020? A few possibilities are put up by researchers in the same New York Times article. According to one argument, drivers may have been more inclined to accelerate on deserted roads, which can have deadly results. Another argument is that the isolation and disruption caused by the epidemic have, in some cases, impaired drivers’ judgement, and that this will cause traffic to recover to normal levels in 2021.
“They [drivers] might not be thinking about the consequences because they’re a little less regulated.”
— Seattle University clinical psychologist Kira Mauseth
The surge in car accidents may also be caused by post-pandemic contributing factors such as the rise in substance abuse and impulsive driving, which includes running red lights, not fastening seatbelts, and driving while distracted.
What effect has the rising number of auto accidents had on the auto insurance market?
The relationship between collisions and auto insurance costs
As we previously discussed, a variety of factors might affect and potentially raise a customer’s auto insurance price. And contrary to popular belief, there is no one-size-fits-all policy when it comes to auto insurance.
Consider the inflation trends of 2022, when car, part, and repair costs felt a little out of reach for most people. When you combine that state of affairs with problems with the supply chain, a rise in auto accidents nationwide, and all the other elements that affect a customer’s auto insurance rate, it becomes understandable why there isn’t a universally applicable solution.
The cost to pay for a claim may go up because auto accidents and repair bills are unpredictable. Furthermore, as business and claim costs rise, most insurance firms may need to modify their rates in order to be viable. When certain trends indicate an increase in the amount of claims that must be paid out relative to what the customers pay in, insurers may raise rates.
In summary, elevated car prices and greater repair costs due to accidents may result in an elevated rate to offset increased losses.
How usage-based auto insurance can assist in reducing expenses
Users who are searching for creative methods to save money on their premiums and have an insurance coverage that represents their driving style are increasingly choosing usage-based insurance, or UBI.
Customers are understandably seeking for ways to cut costs as auto insurance rates are rising across the board. For careful drivers who respect speed limits, stop gently, and drive without using their phones while driving, behavior-based insurance may be an excellent choice.
Your auto insurance premium doesn’t have to be variable and unpredictable because of factors that influence insurance rates. Our is a behavior-based auto insurance provider that awards you with monthly discounts for your careful driving and focused movements behind the wheel.