Auto insurance rates on the rise

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Even though gas prices have started to slowly fall, the price is still expensive. People are avoiding driving as much as they possibly can. This means that the rate of accidents have dropped and would suggest a little relief from high auto insurance premiums. This is not the case however. Actually many insurance companies are increasing their rates, and some by rather large amounts. This increase has been between 7 and 13 percent.
Many years now auto insurance rates have been steady or even have seen a slight decrease. This was because of the new safety features which are now found in most cars, along with campaigns against insurance fraud and drunk driving. Some have said that the decrease in competition has also lent to the rates being kept down.

Some states like California for example say the rates for auto insurance are still falling, yet the nationwide rate is climbing. This is according to the Insurance Infomation Institute.

According to the Insurance Information Institute has said that the premiums have risen at a rate of over 1% this year so alone. This may seem to be a rather small amount, but it is more than four times the rate increase for all of 2007, before gas prices spiraled.

There are a few states in which are issuing challenges against the increases.These states have stepped up their scrutiny.
Insurance comsumer advocate J. Robert Hunter for the Consumer Federation of America is wanting state regulators to look into why rates of insurance are rising when drivers are driving billions of miles less than those of driven last year.
State regulators and governors determine the rates for insurance.Though state regulators are standing on the sidelines, in hopes that competition between insurance companies will keep insurance rates low.There are a few states which do not pre-approve rates, but are able to step in and take action if there is a need for in increase. Evidence states that insurance rates are lower in those states which the regulators use a heavier hand.

Auto insurance companies are claiming that their rates for auto insurance are based on recent claims experience and that the increases for this year are justified. Reduced driving by the people has not as of yet shown up in fewer accidents, and that there are other factors to the auto insurance rate increases. Some of these factors are cost of paint, steel, plastic, aluminum, copper, higher inflation, and the commodities price boom, along with other things needed to repair vehicles.

President of the Insurance Imformation Institute added that the costs to repair a vehicle also drives up the legal and medical costs as well.
Insurers closely track accidents, though their data lags severly behind real time due to the time it takes to settle some claims.
Department of Transportation tracked large declines in driving through June and the insurance institute only has date on the frequency of crashes through March. The information on the amount of crashes will not be known until very late in September.

Mr. Hartwig, who is an economist offered data which shows what happened in the 1970's when gasoline prices spiked, and Americans drove fewer miles to save fuel. During this 5 month oil embargo with Arab of late 1973 to early 1974 the number of auto accidents did decrease, though shortly after the embargo ended the auto accidents rose almost immediately.

Uncertainty over inflation is making it very hard to evaluate insurers projection that the claim of costs are about to increase.