Driving home on a day like today (+4 and raining yesterday and then -14 and blowing snow in this morning) makes you think about accidents and then naturally your insurance. You walk up to your house look in the mail box (or email inbox in some cases – ask us about e-delivery solutions for your insurance policy – Contact Us) and there is your auto insurance renewal. First thought; ‘what are they charging me this year?’ When you review your policy you may see it go up, go down or stay relatively the same. We are often asked the question ‘I have never had a claim and yet I am still paying this much for auto insurance; why is that?’
Rates are determined by each individual insurance company through actuarial data composed from claims information, chances of a claim, cost of parts in the event of a claim, etc. Rating systems and determining factors vary between each company. We have many markets (all of them are amazing!) and being able to have the ability to choose a market that suits your needs best is why you have a broker like Ravenhill Agencies. We do the work, shopping around for you to ensure you have the best coverage that suit your individual needs and requests, at the best premiums. Often we already have you with a company that is offering the best rates and coverages for you.
So you are now thinking, ‘That’s all great, but why are my rates still increasing?’
Here are a few of the reasons auto rates have recently been increasing. In the early 2000s, insurance companies’ rates were steadily increasing. This was a result of ‘minor injury’ claims rising in cost significantly. A cap on these types of claims was implemented to alleviate the escalating claims costs. In recent years, a few court cases have set new precedents and confusion around what is considered a ‘minor injury’. These types of claims that would have fallen under the cap limits of $4,000 are now seeking payouts of $30,000 to $50,000 or higher.
Another reason is the fluctuations in the temperature and changing weather conditions. You may have noticed some significant weather related or ‘act of God’ events occurring across Canada and with more severity than in the past. Ice storms, tornadoes, floods, fires, wind and hail storms; nearly 60% of these weather related events have occurred in Alberta resulting in billions of dollars worth of insurance claims. These events have nothing to do with the way one drives their vehicle but simply that it was in a location where a storm occurred.
If you have been fortunate enough to go and look or buy a new vehicle lately you will see some pretty amazing safety and convenient features on new vehicles. Beautiful bright head lights, running lights and fog lights, sensors front back and side to side, birds eye view cameras, back up cameras, multiple airbags, new frame technology, all attributing the increased cost of a new vehicle. Although many of these features are reducing the number of claims, the claims that do occur are now more costly. A simple fender bender claim that used to cost $500 to $800 is now well over $1,500 as a result of the various sensors and special paint colours on these vehicles. The technology is great, but the price and complexity if the repair for these technologies is huge and is pushing these claims costs higher and higher.
‘The claims of the few are paid for by the many’ is still the pivotal concept of insurance. So although you may not have had a claim, the factors above are some of the reasons your auto insurance rates may be on rise.
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