Car Insurance Rates Increasing Due to Economic Factors
Car insurance coverage rates are increasing in the United States. A new study has found that car insurance rates for drivers have increased by almost three and a half percent.
Most people would expect that car insurance rates might be going down now. This is because many consumers are not able to buy new cars right now because it is very difficult to get a car loan.
Most banks are very hesitant to issue new lines of credit to consumers right now. A majority of consumers do not have the greatest credit scores so they either get denied a car loan or the payments end up being too high for them because they are given an exorbitant interest rate.
One reason behind this rate increase might be the fact that the economy is so bad now. The number of uninsured individuals has skyrocketed because with millions of people out of work; car insurance coverage is often one of the first monthly expenses that consumers do away with after non-necessity items like cable and Internet service in a bad economy.
Mandatory car insurance laws are in place in about forty eight of the fifty states. However, enforcing them is another story entirely. Many drivers will go uninsured wither for financial reasons or due to the fact that they just do not want to pay the monthly premiums and be a responsible driver.
Rising gas prices have been cited as one possible problem that has caused car insurance rates to spike. The United States is now involved in three Middle Eastern conflicts. There are the wars in Iraq and Afghanistan and more recently the conflict in Libya. All three countries are major oil producing countries. Because the conflict in Libya involves rebels protesting against the country’s leader Muammar Gadhafi, this makes gas prices go up because there is a fear that oil pipelines will be sabotaged. This has not happened yet but many investors have this fear. Everyone knows that the supply of oil will eventually run out; the question has always been when and what will cause the event to finally happen.
The price of tires has increased over the last few years, which has a direct impact on the number of car accidents that happen every day in the United States. When tires cost more, drivers are more hesitant to purchase a new set of them because they cannot afford them. Many drivers become involved in car accidents because their tire treads become weak or their tire pressure is too low so the tires pop. This leads to blowouts on the highway that damages the car badly or cause it to swerve into oncoming traffic.
The value of cars has dropped substantially in the last few years. Many consumers bought more economical and fuel efficient vehicles when the Iraq War began in order to save money on gas. Now, the depreciation costs have increased for these vehicles which in turn impacts policy holders in a negative way.
Consumers need to find savvy ways to save money on their monthly car insurance premiums. In a bad economy, going uninsured is not only illegal but a huge financial gamble to make. Car insurance premiums could go down in the next few years if consumers try and take initiative to get things done. For example, the price of tires will go down if demand is higher. Adding a new set of tires, even if they are not very expensive not only helps the car’s handling but also helps to reduce the number of car insurance claims that are filed annually. Another idea is to always stay insured and report any instances of fraud that you find to your insurance company.
Source:
Daily Rosetta
