Consumer Price Index Contradicts Auto Insurance Premium Increases
Recent information released by the U.S. Department of Labor may leave some consumers scratching their heads about increases in their auto insurance premiums. According to data from the Labor Department, the Consumer Price Index, and indicator that measures the cost of what consumers buy and use, dropped by 2 percent between Oct. 2008 and Oct. 2009.
However, the U.S. motorist groups have thrown out data that shows auto insurance premiums have increased by 4.6 percent.
What’s Going On with the Prices?
A number of stats have recently been released by the Insurance Information Institute regarding costs associated with car accidents:
- The cost of motor vehicle body work increased by 2.1 percent
- Legal services increased by 3.5 percent
- Total medical care prices increased by 3.5 percent
While these costs have increased this year, the Insurance Information Institute notes that the these increases still don’t merit the substantial rate hikes seen by the insurance industry.
If the auto insurance companies post profits for 2009, this will not be good news for insurance regulators in each state that are required to ensure costs are monitored and regulated. With insurance being mandatory in 48 states, it is the job of the regulators to ensure that it remains affordable.
Unfortunately for customers, some states allow for flex rating, which allows them to increase their rates without approval as long as they don’t surpass 5 percent. This may explain an overall increase of just over 4 percent.
While auto insurance costs are only currently being fought in a few states (ex. Michigan), by showing the contradiction in the price index versus the increase in premiums, maybe more states will take a closer look at better regulating auto insurance costs.
In the meantime, if your auto insurance company is overcharging you, it doesn’t hurt to shop around for a cheaper auto insurance rate.