Car Insurance Articles
How A Competitive Car Insurance Market Can Benefit Consumers
2009-10-25
The car insurance market in the United States continues to suffer due to the rising cost of car insurance coverage. In accordance with the increasing costs of car repairs and healthcare, claims being filed are costing insurers more money, forcing them to increase car insurance rates. With consumers continually being locked into these increasing auto insurance premiums, members of the industry are beginning to feel something must be done to change the situation. Without doing so, more drivers will likely opt to illegally drive without car insurance coverage. The question is, how did this happen and is there any chance it can be changed?
To find the answer, one must look at the structure of car insurance pricing. While most sellers of goods and services build their businesses around the idea of selling the best items at the best price to everyone equally, insurance providers end up doing quite the opposite. The price of each person's car insurance premiums is based mostly on personal factors affecting them on an individual basis. These factors include the type of car they drive, credit score and their driving record. If the driver has few tickets or accidents, they will be more likely to be offered a cheaper car insurance rate. And, in today's economy, finding people with good credit can be hard. Those with lower credit scores are unfortunately considered by car insurance companies to be higher risk drivers, and therefore offered high insurance rates. As a result, those who need insurance often have a hard time affording it at all.
Car insurance is also government-mandated, meaning that everyone is required to have a certain amount of coverage to drive a car. Despite this, when a person is looking at cutting back on monthly costs, they often opt to minimize or even completely eliminate their car insurance coverage. As a direct effect, uninsured insurance rates increase dramatically, and more and more people are unable to afford what they both need and are required to have.
Most car insurance companies have incentive plans in effect for safe drivers. Building on these incentives and increasing the rewards to the driver can be an effective first step at making car insurance rates more competitive. Car insurance companies can also begin to offer more discounts to drivers for driving certain types of cars or installing certain safety features in their vehicles With healthy competition, all drivers, even those considered high-risk will be able to afford the car insurance they need. And, with drivers constantly making an effort to stay safe and file less claims, car insurance rates will eventually begin to drop. Ultimately this will ensure that all motorists are safe behind the wheel and can afford the car insurance coverage they need.