Auto insurance remains relatively cheap as the pandemic restricts driving

2020 wasn’t very reliable in the “good news” sector, but one of the few silver linings was a nearly universal fall in car insurance premiums. According to Value Penguin’s 2021 State of Auto Insurance report, that grace period is about to end.

Those who saw significant discounts and refunds in 2020 said the average cost of premiums across the country fell by only about 1.7%, despite the report’s authors stating that there was an “unprecedented” reduction in claims. You may be surprised to find that you haven’t. Insurance premiums have risen steadily over the last decade, and 2020 is unusual but not significant. The national average for 2017 rose by more than 7%, ending significant premium increases for several consecutive years.

Even in the states with the highest average premiums, the average premiums did not decrease significantly. Michigan is well above the country’s highest premiums (more than 3.5 times the national average, $ 7,406 vs. $ 1,636), but the rate has fallen by only 4.3%. There was a significant decline in Arkansas and Ohio, but still less than 5%.

“Auto insurance premiums are 106% higher than they were 10 years ago,” the report said. “In 2021, car insurance premiums fell for the first time in 10 years, but they are significantly higher than Americans paid 10 years ago, and have risen every year ever since.”

And that trivial depression is likely to be short-lived. Much of that depends on how public policy and workplace trends change as the country moves out of pandemic-related restrictions, but in conclusion, premiums are expected to return soon. And if that doesn’t happen in 2021, it’s only a matter of time.

According to the report, “auto insurance prices are likely to recover” in 2021. “This is primarily due to the potential for further economic opening across the United States, which increases the need for travel and the number of accident claims.”

According to Fitch, car insurance claims will occur in the first half of 2020, with major insurers reporting a decline of about 30%. However, the severity of these allegations increased by an average of about 10% in both the personal injury and property damage categories.

On the surface, it can be inferred that this has resulted in more accidents at high speeds due to reduced road traffic, but it is not surprising that the reduction of smaller slow claims also contributed to the distortion of the curve. While speed violations surged, road fatalities in 2020 fell by 2%.

“Increased distracted driving, and more expensive charges from vehicle smart technology, will continue to drive higher rates,” said a Value Penguin spokeswoman. Autoblog..

Premium rates could have fallen almost universally in 2020, but the same is not true for all purchase and ownership costs. According to AAA’s analysis of new car buying trends, the only new car ownership costs that are expected to remain below the average over the last five years are fuel and funding costs.

Auto insurance remains relatively cheap as the pandemic restricts driving

Source link Auto insurance remains relatively cheap as the pandemic restricts driving

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