Posted on: Thursday, February 17, 2005
Auto insurance may rise 1.5%
Washington Post
WASHINGTON — The average cost of automobile insurance is expected to rise about 1.5 percent this year, the smallest increase in five years, according to the Insurance Information Institute, an industry group. The institute estimates the average cost for 2005 will be $870 — up $13 per vehicle from last year, continuing a recent slowdown in rate increases. The average premium rose 2.8 percent last year.
"The price of auto insurance is increasing by little more than one-half the rate of inflation," said Robert Hartwig, senior vice president and chief economist of the Institute.
"Many people who, for example, drive safe cars, have excellent safety records and good credit-based insurance scores may see their rates go down," he added.
This year insurers will pay between $15 billion and $20 billion in medical claims, the institute reported. Higher costs for hospitalization and pharmaceuticals, and state regulations that permit abuse of medical treatments and associated legal costs also are to blame.
Although the average driver will pay $870 in 2005, what an individual driver pays will vary by state, insurance company and motorist.
Factors that influence the cost of coverage includes things such as the type of car and specific safety features; the amount of miles driven and type of driving; family claim record, including the number of accidents and their severity; and age, gender and experience of the driver; and credit-based insurance score, according to the institute.
The group cited the declining number of auto accidents, safer cars, new auto theft technology and fraud-fighting efforts as key factors behind the trend, though it said that those have been largely offset by rising costs for medical care and vehicle repairs and higher jury awards.
