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Do Insurance
Premiums Increase Every Year?
Many people ask, "Why do my premiums seem to increase with
each renewal?" The answer is not always so simple. Each year, new vehicles cost
more then they did the previous year. It will probably cost more to fix a
damaged vehicle than it did last year, or five years ago when you first bought
your current policy. However, in many cases, your renewal premium will be less.
Some factors that contribute to decreases in your premiums are straightforward.
According to the Insurance Information Institute (I.I.I.), the cost of auto
insurance is expected to rise only 3.5% in 2004, the smallest increase
over the last four years. Why? The number of auto accidents is on the decline
due to better drivers and safer cars as well as crackdowns on fraud and abuse.
However, due to the rising costs for medical care, vehicle repairs and
skyrocketing jury awards the potential of price increases remain a problem.
Rising automobile theft rates and fraud will keep costs higher for motorists in
some states.
The projected increase represents a substantial slowdown from 2003 when auto
insurance costs rose by 7.8%, the I.I.I. observed. The average
cost for auto insurance nationwide for 2004 is estimated at $871, an increase of
$29 per vehicle from last year.
Unfortunately, even though drivers are filing fewer claims these days, the
claims that are filed are costing the insurance companies more than they used
to. It is costing more to repair cars as the amount of damage sustained in
crashes is up from what it was a few years ago. Some in the industry feel this
is due to accidents involving sport utility vehicles.
The cost of medical coverage is also increasing. This year insurers could pay as
much as $20 billion in medical claims. Higher costs for hospitalization, medical
care, medication and associated legal costs are also to blame.
What can you expect to pay for insurance? In many cases, your renewal discount
will offset a rate increase from your company. It can become hard to keep track
of increases if you make many changes to your policy. When you move to a new
residence or get a newer vehicle as these factors affect the rate you pay. Your
driving record is also one of the factors the insurance company uses in
determining your rate.
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