Zebra’s survey of U.S. auto insurance rates documents that average annual premiums have risen 20% since 2011.
A report from auto insurance pricing engine Zebra revealed that auto insurance rates in the United States have reached an all-time high. According to Zebra’s research, average annual auto insurance premiums across the U.S. now stand at $1,427, an increase of 20% since 2011. In some cities, annual premiums soar to $6,000. Michigan was home to the highest rates at $2,160, while North Carolina ranked the lowest with annual premiums of $865.
For its annual report, Zebra analyzed 52 million auto insurance rates from all U.S. zip codes to understand how insurers price policies. Adam Lyons, Founder and Executive Chairman at Zebra, explained in a statement that the company now factors in elements like technology and natural disasters in addition to traditional benchmarks like age, driving record, and credit scores.The report found that national year-over-year rate increases hit a high of 9%, but it noted that the rate is as high as 45% in certain states. It added that rate increases differed dramatically from state to state. Some states logged hikes of more than 60%, while rates in other states rose by only 1%. Ten states registered a net decrease in the average cost of a premium.
Less Well-Known Factors Pushing Up Auto RatesIn addition to the cost of repairing cars outfitted with recent driving technologies, the Zebra report outlined a number of other factors that influence premiums such as state regulations and the weather. Michigan, for example, requires all drivers to carry unlimited personal injury coverage, a policy that indirectly leads to higher auto premiums.
As insurers in these regions pay a high number of claims, auto insurance rates are also expected to rise in places hit by last year’s hurricanes and wildfires, but these increases likely won’t happen immediately. “Rate changes may not occur until months or even upwards of a year after an event,” the Zebra report stated.
Another less publicized factor may be the upcoming repeal of the Affordable Care Act’s mandate that all individuals purchase health insurance. Paul Heaton, a senior fellow at the University of Pennsylvania Law School and an adjunct researcher at the RAND Corporation, wrote in U.S. News & World Report that the recent tax law’s elimination of the individual mandate by 2019 may prompt many Americans to forgo health insurance. If so, medical expenses previously covered by health insurance following a car accident will be shifted to auto insurers, a transfer that could prompt auto insurers to raise rates.
How to Drive Down Auto Insurance Rates
While auto insurance rates are spiking across the country, insurance agents can help their clients drive down their skyrocketing premiums by sharing some simple strategies with them. Here are four tips that could lower any driver’s monthly premium:
Put down the cellphone. As more accidents occur due to distracted driving, communities have cracked down on motorists using their phones — and that means higher insurance rates for violators. According to the Zebra report, a driver cited for texting or speaking on their cell phone can expect a 16% bump up in their premiums. In some states, the increase is as high as 40%.
Raise credit score. Improving one’s credit score leads to tremendous reductions in auto premiums. Indeed, Zebra reports that advancing from poor to exceptional saves drivers 53% annually. Rising just one tier shaves an average of 17% per year on rates.
Pay per mile. For drivers who don’t commute over long distances daily, a pay-per-mile insurance policy like the one offered by Metromile charges them for each mile they travel in addition to a base monthly rate. If they don’t drive at all during a month, they could pay only a $30 fee.
Avoid accidents. Zebra discovered that drivers who cause an accident will see their premiums go up by 30% to 50%. As a result, insurance agents should always urge their clients to practice safe driving habits.
As auto insurance rates shoot up to record heights, insurance agents have a unique opportunity to help their clients decelerate the high cost of driving. Affordable choices are still available, and insurance agents can lead their clients to those options.