The continuous stream of auto insurance commercials on TV bragging about their lower rates may have consumers believing rates are down. Unfortunately, this is not the case. Auto insurance rates have increased about 10% between 2008 and 2010 based on smartmoney.com’s report from the Insurance Information Institute. It doesn’t stop here. Rates are expected to rise further this year by around 4%. In the last 10 years, rates have risen by 30% causing financial strain on millions of Americans.
The executive director of advocacy group Consumer Watchdog, Douglas Heller, points out that this is a very different picture than what is painted in the media. Many consumers don’t even realize they are paying so much more for their auto insurance coverage. Larry Thursby, vice president of personal auto insurance for Nationwide Mutual Insurance says it’s cost-based pricing and as costs increase for the insurers, price hikes are passed on to the consumer.
The article “Auto Insurance Rates On the Rise” by Jason Collazo on Forbes.com talks about how increasing medical costs are making auto insurance rates higher. Exorbitant medical bills auto insurance companies have to cover for injuries due to auto accidents are making rates increase. This is in addition to more expensive parts and more expensive labor. These high rates are pushing more drivers to go without auto insurance even though that is against the law. About 16% of drivers are currently unemployed, and this number could increase as rates go up further and the economy continues to struggle.
Written by Sara Smart
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