December 11: Jackie Hunt was surprised to open her six-month car insurance renewal notice to find her premium increased by $150.
Blakely’s wife, 60, anticipated an increase due to inflation, but the rate seemed unusually high since she and her husband, Richard, 62, had no accidents, no tickets or changes in coverage.
“I was beyond flabbergasted,” she said. “Nothing had changed. We didn’t go up with anything comp and collision wise and we didn’t bring anything down. It was a complete shock.”
Nationwide, auto insurance rates increased 11.6% from January to October and 12.9% compared to October 2021, according to consumer price index data released by the US Bureau of Labor Statistics. USA
In Pennsylvania, auto insurance premiums from the 40 largest insurers rose an average of 12.7% from November, according to rate increase filings analyzed by New York-based S&P Global Market Intelligence, a provider services and information solutions for global markets.
GEICO Corp. had the largest average increase, 23.4%, affecting about 408,000
Farm, with an average increase of 16% on approximately 2 million policies; and Liberty Mutual, with an average increase of 17.9% on approximately 222,000 policies.
Industry analysts say the increases are largely related to inflation and supply chain issues that have caused costs for parts, repairs and accident-related medical treatment to rise.
The number and severity of car accidents have also increased, reaching a 16-year high in 2021, according to the National Highway Traffic Safety Administration.
That combination led to significant underwriting losses for insurers, said Mark Friedlander, a spokesman for the New York City-based nonprofit Insurance Information Institute.
“Some industry leaders have indicated that 2022 will be their company’s worst auto underwriting year on record,” Friedlander said.
That has resulted in many insurers seeking multiple rate increases this year, said Cate Deventer, an insurance analyst with Bankrate, a personal finance website that provides information to help consumers.
The average annual cost of auto insurance in Pennsylvania this year was $2,002 for comprehensive coverage, 13% more than the US average of $1,771, according to Quadrant Information Services’ Bankrate analysis of average quoted premiums.
What drivers pay varies based on individual factors, including driving history, age, vehicle type, city of residence, miles driven, and coverage limits.
Combining auto and homeowners insurance, paying the premium in full, and maintaining a good driving record can lower rates. Industry analysts point to other ways to lower fees:
—Get quotes from multiple carriers. Insurance companies have proprietary rating models that can vary significantly, even based on geographic area, Deventer said.
“The exact same coverage can cost very different amounts with different insurers,” he said. “Quotations can vary by hundreds of dollars.”
The Hunts found a new auto and renters insurance policy with the help of Brianna Keeler, a licensed agent with Comparion Insurance in Moosic. They will save about $350 a year between the two policies.
—Select limited damage and/or alter coverage levels. Pennsylvania allows drivers to choose between full liability and limited liability policies, which dictate the rights to recover damages if you are injured in an accident caused by someone else.
Limited damage policies save 10-15%, but policyholders lose their right to sue for pain and suffering, except for serious injuries and a few other exceptions. Statewide, about 65% of passenger vehicles were insured with limited damage in 2020, according to the latest available data from the Pennsylvania Department of Insurance.
Reducing or increasing deductibles for collision and comprehensive insurance, reducing liability coverage, and/or eliminating underinsured and uninsured motorist coverage also saves money. Consumers should be very careful when considering these options, as they can significantly increase out-of-pocket costs and/or expose assets.
Pennsylvania requires motorists to carry minimum liability coverage of $15,000 per person, $30,000 per accident, and $5,000 in property damage.
Noreen Thomas, owner of a State Farm agency in Clarks Summit, said that reducing liability one level in most cases will only save a few dollars. She strongly advises clients not to carry just the bare minimum because it exposes them to significant risk, especially with increased medical and repair costs.
“If you hit another vehicle and there is more than $5,000 in damage, they can come after you to fix the vehicle,” he said. “Today, $5,000 in damage might be repairing a dent in a door and repainting.”
On the other hand, dropping uninsured or underinsured motorist coverage jeopardizes your well-being, attorney Dan Munley said. That insurance allows policyholders to collect on their own policy if they are injured by another driver who had little or no insurance to cover the damage.
“You’re protecting yourself from catastrophe,” Munley said.
—Consider installing devices that monitor driving habits. Several insurers offer discounts for using a phone app or an in-vehicle device that monitors driving habits, including how hard and how often you brake, how fast you accelerate, mileage, and time of day. in which he drives Discounts typically run to around 4%, according to a 2022 rate analysis by Zebra, an auto and home insurance comparison website.
Most insurers only use the data for the discount and not to penalize bad driving habits, but consumers should check with the insurer, Deventer said.
Pennsylvania does not prevent insurers from using the data to increase rates, but it does require identification of tracked driving habits and how they might affect rates, according to the Pennsylvania Department of Insurance.
State Farm only uses your tracking device data to obtain discounts, which start at 5% of the premium and can increase over time, up to approximately 20%.
“Some people are very hesitant about it, but then someone in the family tries it and sees the discount,” Thomas said.
Contact the writer: tbesecker@timesshamrock.com; 570-348-9137; @tmbeseckerTT on Twitter.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.