How Vehicle Recalls Affect Existing Car Insurance Policies
Vehicle recalls are big news. With the number of recent high profile recalls seeming to increase, the possibility of a recall is on the minds of most car owners. What has not been discussed is the important effect these types of recalls might have on car insurance policies.
Vehicle recalls are not listed as one of the main contributing factors to car insurance policies. In fact, when Toyota and GM were involved in recent vehicle recalls, many insurance companies came forward to publicly declare that the recalls would not affect their policyholder's costs.
However, this is not entirely the case. Two of the key factors that contribute to the prices of car insurance policies are repair costs and car safety ratings. These factors are most definitely affected by vehicle recalls. Policy owners may find their rates rising because the car they have insured has been declared unsafe and is being recalled. Recalled models can cost insurance companies more to cover because they are unsafe and may require extensive repairs. Thus, the costs of insuring these vehicles increase, as do the costs for the policy owner.
In the case of recent high profile recalls, the manufacturers took responsibility and publicly announced the problems with their vehicles and the recall. Sometimes, however, manufacturers are hesitant to do so because of the financial and public relations ramifications of a widespread recall. In these cases, insurance rates can still increase for a specific vehicle. Unfortunately, as claims are made against the vehicles but a recall is avoided, it is many times the driver or car owner who bears the brunt of the costs in both repairs and increased insurance costs because of rising claims against that particular model.
When purchasing a car, it's important to check the safety ratings and recall history of the manufacturer and the vehicle line. If the model has been recalled in the past, it might be best to choose a different for not only safety reasons, but also the negative impact of a low safety rating on your insurance rates. Also, it's important to stay compliant with any and all recalls to maintain your car safety. Should you ignore a recall and continue to drive your car, you could be subject to increased insurance rates as the safety rating of your vehicle goes down. If your vehicle is recalled, make sure to understand and follow all recall instructions.
Vehicle recalls are an oft-ignored possible contributing factor to rising costs of car insurance policies. Policy owners should be aware of how vehicle recalls could affect their insurance rates, and be sure to act quickly if their vehicle is recalled.