If you’re thinking that it’s more expensive today than in the past to own a car, you’re right. In fact, the cost of an average auto insurance claim in just the past few years is trending upward and far exceeding inflation. And it doesn’t look like this trend is going away anytime soon.
As safety features become more common, more vehicles will come with higher costs. For example, by 2022, nearly every vehicle sold in the U.S. will come standard with automatic emergency braking. But the price for this improvement also means even a small accident could require thousands of dollars to repair.
So it’s more important than ever to understand the new costs that come with your car and do what you can to keep your costs down.
Minor car damage can be a major expense
As auto manufacturers move toward increased safety and autonomous driving capabilities, more safety and navigation sensors have been added to our cars. Most of the sensors are located near the outer surface of cars in order to work. Unfortunately, this is also the most vulnerable spot in an accident—even in a seemingly minor fender bender. And sometimes, even if the sensors are not damaged, the presence of sensors elsewhere in the car can be costly.
For example, front collision sensors may be mounted on the car’s rearview mirror stand just inside the windshield. These sensors look through the windshield and for them to work properly, the windshield glass has to meet very specific requirements for clarity and lack of distortion. Because of this, even if your windshield has minor damage, it often means you’ll need to replace it with an original equipment manufacturer windshield, not the less expensive aftermarket glass. This can more than double the average cost of windshield replacement. Adding to the cost is the technician who must recalibrate the front collision sensors for the new glass, potentially adding hundreds to the repair bill.
Backup cameras, touch screen controls, and blind-spot monitoring are other examples that may make us feel safer but come at a price. Sensors on bumpers and side mirrors in particular are easily hit—and with the added technology, are more expensive to repair and replace.
It’s estimated that the complexity of new vehicle electronics is ten times what it was just seven years ago, making it more akin to computer repair. Further, each car manufacturer has its own proprietary system of software, hardware, and processes to determine potential problems with the sensors, which can take more time and involve more steps than ever before. Computerized scans need to continue until everything is working per the manufacturer’s specifications. In addition, car dealers or third-party consultants often have to be involved to interpret the codes the scanners produce. And it’s extremely important to get it right—the system is very exact and if not calibrated correctly, it could literally mean a matter of life or death for the occupants of the vehicle.
Rising claims costs
These safety features that were once uncommon are quickly becoming standard on many vehicles. The increased costs for repair, manufacturer-approved parts, and labor costs also mean more expensive insurance claims.
Other factors contributing to higher insurance claims include:
- Rising medical costs for injuries.
- Lower unemployment, which means more people driving and purchasing more expensive cars.
- Rising claims in regions with more severe weather conditions.
- Increasing numbers of distracted driving accidents.
The importance of defensive driving can’t be stressed enough. While you can’t avoid every mishap, you can lower your chances of one—which may help keep your costs down.
- Don’t rely solely on technology to keep you safe. It’s easy to do but, perhaps ironically, too dangerous. For example, you should still actually turn and look directly behind you when changing lanes to avoid missing something undetected by your mirrors. Be mindful about remaining an active driver instead of passively relying on gadgets.
- Know your car’s limits—how long does it take to stop? How much grip do your tires have? Pay attention to how your car reacts in various situations.
- Stick with your car’s maintenance schedule to keep it running safely.
Avoid aggressive driving—others as well as yourself. A few more minutes to get somewhere isn’t usually going to matter.
- Scan ahead to increase the chances of seeing a problem and having time to appropriately react to it.
- Lock your car, garage it when you can, and never leave valuables in your car.
- Always wear your safety belt.
Make the most of your insurance
According to the Bureau of Labor Statistics, the cost of living rose 2.4 percent in 2018, but the cost of motor vehicle insurance and hospital services rose faster (7.4 percent and 4.4 percent, respectively). So it’s more important than ever to go with the right insurance coverage for your needs so you don’t risk leaving yourself (and your family) exposed to financial loss or purchasing coverages you don’t need.
People tend to think about risks they have experience with or can conceive of—like the fender bender. The risk of catastrophic events is often dismissed because they happen less frequently, yet they can be far more financially devastating. Member Benefits recommends a minimum of $250,000/$500,000 (per person limit/per accident limit) for bodily injury and $100,000 for property damage.
Unfortunately, the costs you may owe in an at-fault accident can far exceed these limits. Because typical auto and home policies can still leave you financially vulnerable, we recommend you also have personal liability insurance (umbrella insurance) for additional protection. Umbrella insurance provides you with significant additional coverage at a very low cost.
Some ways you may be able to lower your insurance costs include:
- Raising your deductible.
- Reducing optional insurance on an older car.
- Bundling your insurance.
- Maintaining good credit.
- Taking advantage of all available discounts.
Get the right protection for your circumstances. Contact us to review your current insurance policy and answer your questions about auto insurance by calling 1-800-279-4030.