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Why Car Insurance Premiums are on the Rise in 2009

Car insurance premiums have soared this year due to the turbulent economic crisis. The fiscal situation has led to a rise in car insurance premiums, and it’s expected to get even higher. We’ve seen a 12.25% hike at the national level, with some states reporting little to no stability. The national car insurance premium average increased by $8 last month, and now costs around $1,796. Many speculate that with the price of gas slowly rising again, obtaining coverage for vehicles is getting more expensive, especially on a month to month basis.

In addition to the global financial situation, other factors have also contributed to the recent rise in car insurance premiums. Despite high gas prices, there are more vehicles on the road than ever before. More people are driving and insurance companies have to meet consumer coverage demands. From offering free online quotes to promises on lowering interest and premium rates, many insurance companies are trying to counter the increases with premium services.

Another factor is the increase of fraud and personal injury claims. With the employment market as uncertain as ever, several people have tried to make ends meet by faking injuries in auto-related incidents. As sad as this is, the number of motorists claiming whiplash and other injuries has tripled since the late ’90s. This has not only led to a car insurance premium increase, but also a rise in costs to cover uninsured motorists involved in accidents.

The legal fees associated with these incidents are also another factor. Due to an overwhelming volume of fraud related cases, car insurance companies have had no choice but to increase premiums. This coincides with the demand for legal teams to sort through documentation, organize material, and work with car insurance companies to hopefully reach a favorable settlement for all parties involved. This takes a considerable amount of time, and therefore, the fees assessed have risen dramatically.

A huge reason for the recent increase is providing coverage for new drivers. This is generally applied to teenagers, who present a higher risk than seasoned or older drivers. In the majority of the country, driving is a necessity and no longer a luxury. The U.S. is becoming more of a mobile society; therefore, insurance companies want to cover as many motorists as possible within a safe and efficient policy. A new driver will be charged a higher premium due to being more of a liability than a veteran motorist. This, coupled with the many reasons for the increase, has doubled and even tripled the premiums for our newest motorists across the U.S.

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