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Car Insurance Expected to Rise in 2010

As if this down economy wasn't hitting consumers enough, car insurance providers plan to increase their premium rates in 2010. With consumers already cutting back on spending money on things such as medical treatment, credit card payments and student loans, they may find it difficult to find affordable car insurance. Spending money on the mortgage seems far more important than spending money on what some view as less important bills in a down economy.

Fifty percent of all car insurance providers plan to increase their premium payments in 2010 by as much as 12%, a percentage that could mean hundreds of dollars for some consumers. According to the Insurance Research Council, one in six drivers will let their policies lapse due to the recession. According to the Insurance Information Institute, the state of New York has increased its "no-fault" premiums by 55%.

Keep in mind, though, that it's important to always be insured. Not only is minimum coverage required by law in all states, being insured also serves as protection for the consumer against large medical expenses and legal fees, and it protects your vehicle at the price that it's worth. You don't want to get caught without vehicle insurance.

Enormous medical and legal fees can accrue in no time, which can be difficult to pay, especially during a recession when money is tight. The increase in auto insurance can be scary for consumers who are trying to follow the law by having insurance; however, there are ways drivers can save money, even with the scheduled price increase. Knowing your options and being a well-informed consumer will benefit you in the long run.

Increase not Reflective of Decrease in Accidents

The hike in insurance premiums seems to baffle consumers. Fatal auto accidents and injuries have decreased in the past three years, with drunk driving drastically declining. According to the National Highway Traffic Safety Administration (NHTSA), fatalities are at there lowest since statistics started being gathered in the 1970s.

Rae Tyson, spokesperson for NHTSA, says, "We are hitting fatality rate levels we couldn't have imagined a decade ago". No one is sure of what has caused the fatality decrease. Some speculate that the trend is common during a recession. Others claim that fewer people are on the roads due to loss of employment.

No matter the reason for the decrease in fatality rates, consumers think the increase in insurance premiums is unnecessary and simply another way they are being cheated in this down economy. Insurance companies, however, view it differently. With consumers dropping policies, insurance fraud increasing due to the recession, and medical costs on the rise, insurance companies feel the need to make up for the loss in profit by hiking premiums.

United States Senate Intervenes

The United States Senate has intervened on the 2010 car insurance hike. They too cannot understand the need to further hit the pockets of consumers. Insurance companies claim 87% of their wages is spent on medical claims and property damage alone. The Senate is not buying it and has requested a fiscal breakdown of spending. So far findings suggest that $0.65 cents of every dollar is spent on hospital bills and doctor's fees, which is less than insurance companies originally claimed.

Additionally, the majority of consumers for insurance companies are business organizations, a group whose insurance claims rarely result in medical expenses and property damage. Perhaps the accountability being requested by lawmakers will trickle down to the consumers and soon prices will decrease.

Only time will tell if insurance providers are required by law to lower premiums. In the meantime, consumers can begin saving today by implementing a few easy guidelines.

Ways to Save on Your Auto Insurance

Always remember that no matter how high auto insurance premiums increase, in most states it is against the law to drive without at least minimum coverage. The penalties and fees you might have to pay if you are caught without insurance far outweigh what you would spend if you simply had insurance up front.

There are always ways to save money on your insurance premiums. The most important thing to consider when budgeting for insurance is to shop around. Even if you think you have the best quote because you've had the policy for years, it may be time to investigate other quotes so you, the consumer, can make a more informed decision. Shopping for insurance quotes online has become increasingly popular during the recession, and it never hurts to know what's out there.

Don't be afraid to ask about customer service and payout rates for car insurance companies. If they cannot provide this information up front, you may want to question their reliability. Ask friends and neighbors about their insurance quotes, and weigh your options when buying auto insurance. Another thing to consider is that it's optimal to have adequate time in order to make the most informed decision. Don't wait until your policy has lapsed before you shop around. It's best to begin shopping one or two months before your decide to change service providers.

Other ways to save money during the increase in car insurance is to bundle your policies. If you have homeowners insurance as well as car insurance, bundling the policies can sometimes save you up to 10% of the total cost of both policies. Ask your insurance provider about bundling options, as well as other ways to save such as taking a defensive driving course. Many insurance companies offer a discount to consumers who take a defensive driving course. It helps the company because the consumer becomes a more informed driver, and the consumer wins because their insurance rates decrease.

Keeping a clean driving record is also helpful in keeping premiums down. Obeying all traffic signs and signals will insure your safety, other people's safety, and it will keep money in your pocket. Being caught without car insurance will be reflected on your driving record.

If you have a teenage driver on your policy, you may want to limit their driving in order to save money on your insurance. Teenagers are one of the most at-risk groups covered by insurance companies and thus cost the most to cover. It would not be a bad idea for your teen to attend a driver's education class. Most insurance companies also offer a discount to teens that keep at least a B average. Keeping your teen safe on the road is important, but realize that there are ways of doing that without breaking your wallet.

Downsizing is another option to save money on your car insurance. It is sometimes cheaper to drive an older car that is still considered safe. Remember, you can ask for vehicle insurance quotes on any vehicle at any time without locking into a policy. It never hurts to ask. Perhaps it's time to pull that older car out of the garage in order to save on premiums. You may also consider paying for insurance less frequently during the year. For example, paying for your insurance twice a year rather than every month can save money. Keep an eye on your bill, but remember it's better to be insured than not.


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