The improving economy is great news for many people, but not if you’re an insurance carrier or have an auto insurance policy.
More people drive when the economy improves, according to the Federal Highway Administration, and more drivers on the nation’s roadways results in more accidents.
That combination led to more frequent and severe property damage and bodily injury claims for auto insurance offered by Allstate Corp., which in early August announced it planned to raise auto insurance rates after a 41 percent decline in its operating revenue during the second quarter of 2015. It reported a 48 percent decline in the first quarter from underwriting income from auto coverage.
Allstate had already raised auto insurance rates 1.5 percent in the second quarter in 34 states, with total brand rate increases at 3.5 percent during the past year. The insurer says it plans to seek future rate increases for its products and brands.
“There are more accidents now over the last couple of years than there have been because economic activity has gone up,” said Allstate Chairman and Chief Executive Tom Wilson in a news report. “We and other people have been raising our rates to account for that.”
Other accident causes
Along with more people driving in a good economy, there are many other reasons for auto accidents.
Rain is the biggest problem, according to data from the National Highway Traffic Safety Administration that was analyzed by the Auto Insurance Center. Between 2009 and 2013, rain caused more driving fatalities than snow in 39 of the 50 states. Though reckless and drunk driving and speeding killed more people, wet weather is common in many areas and drivers may be exercising less caution when it rains than they would in winter conditions.
Speeding was a contributing factor in 29 percent of all fatal crashes in 2013, the latest year that data is available for, according to the NHTSA.
Drunk driving is dropping, but it still accounted for 31 percent of all motor vehicle traffic fatalities in the United States. Combined with speeding, drunk driving is a deadly combination, with 42 percent of intoxicated drivers who were involved in fatal crashes in 2012 speeding, compared to 16 percent of sober drivers.
Fatigue is another large factor in fatal crashes, with 21 percent involving a drowsy driver, according to a 2014 study by the AAA.
How to save
Even in a strong economy, when you might be able to afford auto insurance price increases, it makes sense to shop for auto insurance.
The price of auto insurance is affected by many factors, including your driving record, how much you use your car, where you live, where your car is parked, your age, gender, credit, type of car, and the type and amount of coverage.
Changing the factors that you can control, such as buying a used car and parking it in a safe neighborhood, can lower the premium.
A teenage driver, for example, can lower their auto insurance premium by getting good grades, taking a driving improvement class, building good credit and not getting speeding or other tickets.
When shopping for car insurance, consider high deductibles. Increasing a deductible from $200 to $500 can lower collision and comprehensive coverage cost by 15 to 30 percent, according to the Insurance Information Institute. Going to a $1,000 deductible can save 40 percent or more.
Just make sure you have enough money in the bank to pay the higher deductible if you have a claim.
Buying auto and homeowners insurance from the same company can also lower expenses, and some insurers reduce rates for long-time customers. Still, the insurance group recommends shopping with different carriers who may offer more of a discount than a multi-policy discount.
Aaron Crowe is a freelance journalist who covers insurance and personal finance for a variety of websites.