Commercial Auto Rates Continue Climbing

Commercial Auto Rates Continue Climbing

By now, you’ve likely noticed that your commercial automotive insurance rates have been increasing since last year, and for now there seems to be no slowing the momentum. The increase is probably noticeable since the period between 2011 and 2016 saw rates drop thanks to a number of factors, including fewer accidents, fewer cars on the road and more competition among insurance companies vying for your business. In this article we look at what’s behind the increase in rates.

More drivers

More people are driving since the recession that started in 2008. When millions of Americans lost their jobs and money was tight, fewer people were driving. During this same period global oil prices dropped to their lowest level in more than two decades.

Distracted driving

According to the AAA Foundation for Traffic Safety, about 87% of drivers admit to engaging in at least one risky behavior while behind the wheel, including using their phones and not wearing seatbelts.

Claims costs increase

Besides more accidents, the costs of claims are also on the rise. There are three main reasons claims costs are increasing: 

  • Rising cost of medical care for people injured in accidents 
  • Rising cost of auto repairs 
  • Rising cost of auto parts

Uninsured motorists

The number of uninsured drivers continues to increase and take its toll on the rest who play by the rules. Thirteen percent of drivers drive uninsured and claim payments for them have risen by 75% over the past 10 years, resulting in a $14 premium increase for every insured individual, according to the Insurance Research Council.

Inexperienced or undesirable drivers

As the economy has grown, companies are having a hard time finding experienced, good drivers. With more inexperienced employees driving commercial vehicles, the number of accidents has also risen.

Fewer insurers

There’s been a shakeout in the commercial auto market and there are now fewer players than before, and that’s resulted in rates increasing as insurers get more selective about which policies they will write.

The takeaway

With auto insurance premiums on the rise for the foreseeable future, it’s more important than ever to be aware of the steps you can take to save on your premiums. You should also ensure that you have a driver safety program in place in addition to policies that include do’s and don’ts for all employees that drive as part of their jobs. Call us to discuss your options.

More traffic – Total miles driven increased 50% faster in California than in the rest fo the country since the start of 2015. More vehicles = higher frequency of accidents.

Distracted driving – One-quarter of crashes involve drivers talking on phones or texting.

Escalating medical costs – Medical care costs are climbing more than 1.5 times faster than other costs.

More faciities and other servere accidents – accident rates person and per mile of driving are rising in California.

Inexperienced or undesirable drivers – A shortage of skilled commercial drivers with good driving records = greater odds for accidents.

Rising auto repair costs – Record U.S. auto sales mean garages are often servicing newer cars with more expensive parts. Even minor repairs can cost big bucks.

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