Residents in Alabama have been surprised (or shocked!) at the increases on their auto insurance policy. As of December 2023, auto insurance rates are up 20.3% nationally compared to December 2022! Let’s take a look at why auto insurance rates have escalated.
Check out our article ____ for some strategies on what to do about it!
Because insurance companies have to file for rate changes in each state and then get approval from the state insurance commissioner, it can take several years for costs to impact our insurance premiums.
Here are some of the critical factors contributing to the rising auto insurance costs in Alabama:
📞Distracted Driving: Smartphones and in-car technology have led to an increase in driving incidents. Distracted driving crashes are often bigger because the driver doesn’t apply brakes before the accident. In 2021 there were 3,522 people killed in the US and an estimated additional 362,415 people injured in motor vehicle traffic crashes involving distracted drivers. (1)
🚙Increased Cost of Vehicles: The price of new trucks and SUV’s is up 30% compared to 2018. (2) Used cars and trucks are up 35% vs 2019. When a car gets totaled it costs more to replace it now: 10 years ago it might cost $1,000-$2,500 to fix a fender-bender, but now bumpers are filled with sensors and cameras and that rear bumper now costs $4,000+ to replace.
🧰Escalating Repair Costs: Compared to 2019, auto body work and repair costs are up 36%. Auto repair costs are up 20% in just the last year alone! These increases lead to premiums going up.
🤑💰Legal System Abuse: Are there legitimate lawsuits against insurance companies? Of course there are! But there’s also a massive industry in America that’s built on questionable lawsuits. It’s estimated that every American spends $1,300 a year in ‘tort tax’. (3) This is the amount of extra cost from frivolous lawsuits that’s baked into the products we buy on a daily basis.
🏥Rising Medical Costs: The cost of medical care is continually on the rise, and this directly impacts auto insurance rates. In the aftermath of an accident, insurers often have to cover medical expenses for both drivers and passengers.
🌪️Natural Disasters and Weather-Related Claims: In 2022 Hurricane Ian damaged 358,000 vehicles- many being totaled from water damage. Even though these losses were primarily in Florida it was a huge event that impacted auto rates in all states. These big events also drive up the demand (and prices) for new and used vehicles.
🚔Uninsured and Underinsured Motorists: As auto insurance premiums have rise, more people in Alabama have lowered their limits or dropped their coverage altogether (but they’re still driving!). Many Alabama drivers only carry the state minimum that has $25,000 in property damage liability. So if a driver with state minimums totals your $50,000 truck, it will depend on your insurance to pick up the difference (assuming you carry Uninsured/Underinsured Motorists coverage).
Conclusion: We’re seeing more accidents and the costs of each accident are higher! Check out our other blog posts for some strategies to help save on your auto insurance premiums.
Reach out to our office to speak with a knowledgeable Allison Insurance staff member who can make sure you’re covered!
205-738-7444
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https://www.trafficsafetymarketing.gov
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https://www.forbes.com/sites/jimgorzelany/2023/09/29/heres-how-much-pickup-truck-prices-skyrocketed-during-the-pandemic-era/?sh=efe2a1b12faf
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https://www.pacificresearch.org/americans-pay-1300-tort-tax-fixing-legal-system-would-grow-economy-by-2-percent/
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https://www.cnbc.com/2023/07/25/car-repair-costs-are-up-almost-20percent-over-the-past-year-heres-why.html
