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Why auto insurance rates have gone up this year

June 16, 2016
With auto insurance rates rising, it's never been a better time to comparison shop.

Drivers who carefully track their expenses may have noticed a slight change since the beginning of 2016:  Auto insurance rates are rising.

According to a study from AAA, the average American motorist has seen their monthly insurance bill rise by as much as 9.6 percent. That brings the average auto insurance premium payment up to $1,222 annually, more than $100 over what drivers paid in 2015.

At first, it might be natural to think this is the fault of the driver themselves. After all, auto insurance rates are generally determined by accident and criminal history, as well as the type of vehicle driven, location and a number of other factors. One important part of insurance that many overlook, though, is the cost of insuring other drivers. The exact math gets a little complicated, but in general, the more everyone is driving, the more they will be paying for auto insurance.

"More drivers on the road means higher insurance rates for most.”

A report from CBS News went into detail on the relationship between total miles driven around the nation and auto insurance rates. In 2015, American drivers logged more miles on the roads than in previous years, and trend that is expected to continue into 2016 thanks to a stronger economy and inexpensive gas. Sadly, a greater number of miles driven also equates to a higher chance of accidents. Indeed, the National Safety Council estimated that 2015 was one of the deadliest for U.S. motorists in several years. An estimated 38,300 people died in automotive accidents in 2015, while another 4.4 million were seriously hurt.

More accidents means more insurance payments to cover health and repair costs. These higher expenses get passed onto the consumer, and this is one of the biggest reasons why auto insurance rates have generally risen this year. CBS noted that some experts also see an increase in the use of mobile phones while driving, leading to a bump in accidents, injuries and fatalities.

However, on a state-by-state basis, some areas have seen declines in the number of traffic fatalities in 2015. The NSC estimated that New Mexico, for example, saw 20 percent less fatalities last year when compared to the previous year. The precise reason behind this trend is unknown, but it may mean lower-than-average auto insurance rates for New Mexico drivers.

How to save on auto insurance

While rates may be rising just about everywhere, that doesn't mean it's impossible to save on this essential expense. For those who want to get the most bang for their insurance buck, even in the current high-rate environment, there are a number of strategies worth considering.

"As usual, it pays to shop for the best deal.”

Choose wisely:  As usual, it pays to do your homework on insurance policies. According to a study from Consumer Reports, 68 percent of drivers surveyed said they did not comparison shop when choosing an auto insurance policy. More than half of these respondents had been using the same insurer for more than 15 years. Switching to a new provider can save a significant amount, so don't be afraid to look around for a better deal.

Higher deductible:  Another tip provided by Consumer Reports concerned the specifics of an auto insurance policy. The publication recommended choosing a higher deductible plan, especially if you drive an older, less expensive car. Having a low deductible may seem nice, but it ends up causing higher monthly payments in exchange. In addition, Consumer Reports noted that drivers with low deductible amounts may be tempted to make small claims more often, which could raise rates even higher.

Being an informed insurance consumer pays well. Use these tips when embarking on your next search for auto insurance.