Good News For Drivers — Your Premiums Might Go Down This Year

Drivers can count on one thing every year: the cost of their auto insurance is going to go up. In 2005, the average driver paid an extra $25 to insure their vehicle.

But this year holds a pleasant surprise for most drivers: 2006 is seeing the lowest projected increase in six years. Rates for auto insurance are expected to climb by just 0.5% by the end of 2006 — meaning the average driver will see an increase of just $4.

The Cost Of Driving - Decreasing?

“This is welcome news for drivers who have been battered by record high gas prices over the past year,” said the Insurance Information Institute’s Senior Vice President and Chief Economist Robert Hartwig. Dr. Hartwig was quick to point out that the projected increase is only slightly more than one gallon of gasoline.

Auto insurance rates increased by 2.8% in 2004. In 2005, the rate of increase edged down to 2.5%. So why the sharp drop to 0.5% in 2006?

Dr. Hartwig cited several factors:

• Fewer accidents
• Safer cars
• Better anti-theft technology
• Increased fraud-prevention
• More restrictions on teenage drivers

On average, drivers can expect to pay $867 a year for car insurance. But some drivers will pay much less — and may see their premiums decrease from last year’s rates.

Who will the lucky drivers be?

• People with “excellent” driving records
  Safe drivers have always enjoyed lower insurance premiums, and will continue to enjoy them.

• People with good credit scores
  Though some states are proposing restrictions against using credit scores to determine insurance premiums, for now people who pay their bills on time will be seeing lower auto insurance rates.

• People who drive smaller, more fuel-efficient vehicles
  Here’s a reason to trade in your SUV: not only do smaller vehicles tend to hurt your wallet less at the gas pump, but their repair costs are lower. Lower repair costs make insurers happy — so they give you a lower rate.

• People who ride the bus
  Carrying home a week’s worth of groceries on the bus doesn’t sound like much fun. But if you can take public transportation to work every day, you could save money on insurance. The fewer miles you put on your car, the lower your premiums.

Don’t Settle For High Rates Before You Compare

Regardless of what the national average is, insurance rates are always going to vary depending on where you live, your personal profile, and the company you choose.

With the rate of increase slowing, it makes more sense than ever to be choosy about the company you buy your insurance from. Different companies use different criteria to determine you rate. So while one company might charge you a hefty sum for that fender-bender you had a few years back, another might be willing to overlook it entirely.

Before you buy, shop around. Talk to your local agents. Look online. You might be surprised by the different quotes you get.