Car Insurance Rates Going Up

Posted in Auto Insurance

July 7th, 2009

Although the nation’s overall economic news has gotten a bit better as of late, still, many people all over the country are seriously hurting. Recent unemployment numbers attest to the fact that we as a nation are not nearly out of the woods yet. Compounding the problem for so many people is the fact that car insurance rates continue to rise, and in fact, many are pushed higher by the bad economic times in the first place. This is being seen in auto insurance premiums, which are rising at an uncomfortable pace.

Rising Rates

Car insurance rates are rising despite the fact that your driving record might be spotless. Insurance providers are justifying these across-the-board rate hikes by pointing to a rise in claims being filed. While there’s no spike in accident statistics to point to, the bottom line here is that car insurance rates are rising because insurance providers are hurting just like everyone else, and they are looking for ways to either increase or at the very least maintain their profit margins. Additionally, many auto insurance providers have significant revenue on their outside investments, and as the stock market has practically withered and died they’ve seen their fortunes dwindle along with it.

Fraudulent Claims Increase Premiums

Insurance providers can, however, point to one anomalous phenomenon in order to justify their increases: a rise in the number of fraudulent claims that corresponds with bad economic times. Basically, desperate times make people do desperate things, and people will deliberately sabotage their vehicles, whether it’s through arson or driving them into a lake or allowing them to be stolen. When this happens they can then file a car insurance claim and then pocket the cash they get as compensation – they will also be free of that heavy car payment. Clearly, an increase in fraudulent activity will have an impact on car insurance rates sooner rather than later.