Over the passage of time automobiles have become an integrated part of life. The technological advancements in every field and most importantly in an automobile is increasing at a sound pace. The number of parts in a car or bike are increasing and making the assembly more complex with more features and functionality. The number of vehicles on road is consistently increasing followed by an increase in traffic jam and accidents with new drivers adding to the roads every minute. The safety of the rider, as well as the automobile hence, become so crucial and one way to ensure this is auto insurance. With the passage of time, an inclination is observed in the insurance rates which are due to so many factors which require attention for right understanding.
Need For Auto Insurance
With the tech-advancements and increase in purchase capacity automobiles are feasible for every next person. Though, roads and drivers are not in the right condition to accommodate such an increase that cause vehicles and people more prone to accidents. In order to ensure the safety of the drivers on the road and the recovery and maintenance of the vehicle, auto insurance is mandatory. As it provides protection to the vehicle from damage due to accidents and medical or life insurance to the affected people. In case of theft when the vehicle is not traced by the police the owner gets the benefit of claiming the insurance of the vehicle. Recovery of the vehicle not insured becomes quite cumbersome.
Factors Affecting Cost of Auto Insurance
Factors Under Personal Control
There are so many factors that are causing a consistent increase in the cost of auto insurance. Few among these are in control of the customer that is not imposed by the insurance company or the administration but are invited by self either due to negligence or by choice. Before issuing the auto insurance policy company considers a lot of factors including the condition of the vehicle, past record of the accident if any, the case against the driver for rash driving or fraud with insurance company earlier and others build a profile for the customer and it may cause the policy to become expensive than usual.
Sometimes customer selects a much expensive bundle of benefits available from the insurance company that includes terms or benefits that are really not necessary for them. For instance, the customer drives the vehicle less frequently and over a shorter distance in a year and the benefits offered in the policy are favorable for those driving over long distances. Other benefits like GPS tracking or Speed tracking contribute to an expensive insurance policy. So the customer needs to consider all the factors to decide the best suitable and pocket-friendly policy than going for the best and expensive policy as offered by the company.
Factors Beyond Personal Control
There are factors that are beyond the control of the customer and nothing can be done to control the price of the auto insurance. A few of them include increasing repair cost of the vehicle. This is due to the tech-advancements in the automobiles aimed at providing a more comfortable, safer and luxurious ride to the customer. Features based on artificial intelligence like auto parking, driver less cars, auto temperature control, variable speed, and terrain modes etc. are among those which cause the insurance price to rise high, as once they get damaged are expensive enough to be repaired or need replacement.
The increase in the number of amateur drivers who are distracted on the roads and are raising the rate of accidents also contribute to expensive auto insurance as accidents caused due to distracted driving are more severe than usual. The higher risk of the automobiles getting stolen from the neighborhood is also an important factor as the loss is bear by the insurance company and both these factors are beyond the reach of the customer. Another factor that tends to increase the cost of the insurance policy is expensive medical services. This factor is more prominent because in most of the insurance policy the medical expenses of driver, co-passengers and even the other victims hit are made mandatory by the local government and are also in demand by the customers.
There are a lot of cases where fake accidents are mocked up by the consumers in order to claim the insurance money. This malpractice by the consumers’ causes loss to the company and company as a countermeasure increases the insurance rate in order to meet with the losses incurred.
The Bottom Line
It can be observed and concluded that the rates of auto insurance are increasing with the passage of time. Auto insurance is as important and necessary as social security. The factors that increase the cost of the auto insurance policy include expensive repair cost, expensive medical services, negligent driving, increase in the number of theft cases etc., among these a few, are under the control of the customer while others are beyond control. The company also considers the number of fraud cases with the insurance companies where accidents are mocked up by the people in order to claim the insurance benefits, making insurance more expensive. Though expensive or cheaper insurance policy is mandatory in order to ensure complete safety. Measures can be taken to adjust the cost of insurance which is favorable to both buyer and seller.