Sunday, September 7, 2008

Automobile Insurance Premiums Up Though Driving is Down

A heavy factor in deciding your auto insurance premium is the frequency of travel for all drivers in your state. Basically, the more people drive in any given area, the more chances for accidents and the higher the premium in that area.

With gas prices skyrocketing throughout the year and into the summer, motorists across America drove less. One would expect this to result in fewer accidents and lower premiums.

Unfortunately, that isn't the case. According to the Insurance Institute of America, several insurance companies are requesting increases from state governments. This increase will only reflect the maximum premium insurance companies are allowed to charge, not necessarily the amount drivers will actually pay.

Some states, like New York are being vigilant in making the insurance companies justify their increases. However, most states are taking a "wait and see" approach."

The insurance companies justify the increases because of rising repair and medical costs. As gasoline prices rise, so do rubber, paint, and steel costs, ultimately leading to higher gas prices and even higher medical costs.

Historically, insurance premiums have remained level or declined slightly over the past few years.

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