The cost of vehicle coverage will rise by 2.8 percent this year.
American drivers are likely to experience yet another increase in their auto insurance rates, for the third year in a row as insurers attempt to increase their profits in a time that interest rates have been held at record lows, and natural disasters have caused costs to skyrocket.
The average driver will likely see an increase of 2.8 percent, according to the Insurance Information Institute.
This means that consumers who were paying an average of $816 last year will now be paying $839. The Insurance Information Institute (III) released this data in a statement that was published on their own website.
The lower bond yields were seen as a large contributing factor to the higher auto insurance prices.
A similar statement from Citigroup Inc. analyst, Keith Walsh, pointed out that those yields had “imposed somewhat of a discipline” on the insurers, causing them to place a greater reliance on the underwriting of their policies. The III explained that the costs from this year would remain lower than they had been in 2004, at which time the average was $824.
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It was in that year that the Consumer Federation of America released the results of their survey that showed that American adults objected to the use by insurers of policy holder education levels and occupation in order to help to calculate the premiums that would be paid.
The III’s statement said that “Actuarially supported and regulator-approved rating factors used to measure risk enable auto insurers to identify safe drivers, and reward them with lower premium rates.” It then added that as usage based auto insurance policies become increasingly popular, where drivers voluntarily enter into programs that allow their insurers to monitor their behaviors while behind the wheel, the number of potential opportunities for safe drivers to save money are continuing to grow.
The consumer group also pointed out that if these increases are allowed to continue, and state regulators do not slow or halt them, it will be the poor who are most severely punished. Their liability auto insurance coverage can become cost prohibitive, making it difficult for them to legally drive.