Many U.s. States See Overall Auto Insurance Premium Drops
Drivers looking for some sort of reprieve from the tough economic times may find help in their auto insurance bills, according to new statistics. Auto insurance premiums have dropped by about 6 percent over the last year, though experts point out that rates are not as low as they were before the recession. Premiums may continue to drop in price as the recession continues. Analysts believe that the state of the economy is directly responsible for the recent drop in premiums, as well as the rise of the same premiums when the stock market crashed initially.
When the United States economy first showed the signs of recession, many policyholders chose an auto insurance policy with higher deductibles or less coverage in order to avoid high premiums. This led to a drop in the demand for auto insurance. Due to this, insurance companies raised rates. Now, plagued by bad investments and fierce competition, companies have begun offering lower auto insurance premiums to qualified drivers. The lower premium averages through 2009 are a result of this tactic. It's important to note that this is not the trend in all states. In some, insurance rates have continued to rise due to location, which directly affects a driver's insurance premiums. Higher premiums may be common in areas with high levels of auto theft or dense traffic. Luckily, the overall the trend is towards lower premiums. Many insurers insist that any increases in insurance premiums on a state-to-state basis are temporary.
Government incentive programs, like Cash for Clunkers and bailouts for the auto industry, have helped the auto insurance industry recover and have strengthened competition – good news to consumers. The programs led to more sales of new cars, which led to higher sales of new auto insurance policies. There is also a higher level of interest in keeping auto insurance rates low, as studies report that 90 percent of consumers research ways to drop their insurance costs. This is an incredibly high figure when compared with pre-recession numbers. When policyholders use the Internet and other tools to comparison shop, competition increases among auto insurance companies, which in turn offer lower premiums in order to keep a base of loyal clients. To take advantage of the lower rates, drivers should use comparison websites to find lower premiums and attempt to negotiate their current insurers into meeting or beating those prices.
While analysts expect current auto insurance rates to continue to fall, there's certainly an element of unpredictability, and rates could easily rise. Drivers can ensure the lowest possible locked in premiums by re-evaluating their car insurance policies on a regular basis, especially in a bad economy.