It is not uncommon that you may pay more in car insurance premiums than for the actual cost of your car. Frequent questions asked are: "Why does the cost of car insurance keep rising? Are the insurance companies taking advantage of me since state law mandates I must purchase auto insurance?"

There are no simple answers to these questions since everyone has their own opinion. However, a few interesting facts can provide additional insight into answering these questions.

Questions You May Ask-

Q Why do my car insurance costs keep rising?

A There are four major factors that contribute to rising car insurance costs:

1. The number of auto accidents has dramatically increased.
2. The costs of auto accidents have skyrocketed.
3. An accident is more likely to involve a law suit.
4. Auto theft is on the rise.

Q Are there really that many more car accidents?

A Yes. According to statistics from 1987, accidents were up 4.3% and injuries increased 6.2% in just one year. Due to these facts, it will cost more in claim payments for insurance companies. A 7.9% increase in medical costs during this one-year period, combined with rising auto parts and labor prices, cause claim figures to jump even higher.

Q How do lawsuits affect the cost of my car insurance?

A Both legal costs and the number of law suits filed against insured drivers are increasing. For instance, California drivers have seen an increase of 41.2 % of lawsuits filed in motor vehicle accidents from 1984 through 1986. Unfortunately, policyholders must pay for these additional costs through higher premiums.

Q Has the number of car thefts increased that much?

A Yes, and at an alarming rate. Based on figures from 1988, a vehicle theft occurred every 22 seconds throughout the nation; that's about three auto thefts a minute. Auto thefts rose 11.2% in 1988 from the previous year, which means that one out of every 43 registered motor vehicles was either stolen or had its contents or accessories stolen.

Common Questions About Car Insurance