Why is car insurance getting more and more expensive? Technological progress is all about it!
Is your car insurance premium "only going up, never down" every year? Besides the differences in car model and owner background, there are several uncontrollable factors that can cause premiums to rise! Want to know what's going on behind the ever-increasing premiums? AWM will break it down for you
Car insurance claims on the rise
Essentially, insurance is a group of people sharing a single fund. When anyone in this group experiences an accident, they receive a portion of that fund as compensation. Sometimes you put in more money than you get out when you buy insurance, and sometimes you pay out more than you put in.As claims increase, insurance companies' operating costs also rise. To have sufficient funds to handle claims, they will increase premiums in response to the rising claims trend.
Insurance fraud increases
Insurance fraud has become a global problem. In some developed insurance markets, approximately 10%-15% of insurance payouts go to scammers. The UK Insurers' Association estimates that policyholders in the UK pay an average of HK$500 more in premiums annually due to insurance fraud. Of course, car insurance is not immune either;scammers exaggerate the severity of vehicle damage or personal injury to obtain higher payouts.As a result, insurance companies pay out more than expected, leading to increasingly higher premiums for everyone.
New automotive technology
Does your car have these features? Rearview camera, built-in navigation, parking assistance systems, in-car entertainment systems… From gasoline cars to electric cars, from manual operation to autonomous driving, intelligent braking assistance, blind spot detection systems, and more, the ever-evolving technology in the automotive industry is certainly very appealing.However, these cutting-edge technologies also increase vehicle maintenance costs. The increasing complexity of car parts, the difficulty in finding suitable mechanics, and the high price of electronic components all contribute to the rising costs.Consequently, these high maintenance costs are passed on to insurance premiums. This is also why Tesla insurance premiums are significantly higher.
Economic factors
Yes, inflation also affects car insurance premiums.Rising gasoline prices, labor costs, and parts costs will increase claims, requiring insurance companies to charge higher premiums to ensure sufficient funds.Some car owners may try to save money by canceling or reducing coverage, such as switching from full coverage to three types of coverage. However, it's advisable to carefully consider this and ensure your car insurance plan provides adequate coverage to offer the protection you need in the event of an accident.
Car owners insured with AWM can compare car insurance plans from over 20 insurance companies to find the best deal and most suitable policy for you. In the unfortunate event of damage to your vehicle, our professional team will handle claims and repairs quickly and efficiently. Get a quote and purchase car insurance from AWM now !