Industry sources have revealed that car insurance premiums are climbing in the U.S., thanks in part to the poor performance of the economy.
With unemployment on the rise, more and more Americans are choosing to increase deductibles or even drop their policies. Insurance companies say that this is one of the main reasons for higher premiums. Because of more uninsured drivers on the road, providers point out that they have to raise insurance rates to cover any expenses involving uninsured motorists.
Analysts also blame the sudden spike in insurance fraud cases for the climbing rates. California state officials recently admitted that the number of car insurance fraud incidents in the state has risen significantly, as more car owners are looking for ways to cut back on their expenses. Drivers are known to set their own vehicles on fire, or dump them in lakes and rivers in attempts to collect insurance money. Fraud cases are on the rise even as the U.S. has seen a major drop in car theft incidents.
Car owners in the states of Georgia and Florida can expect to see some of the highest increases in auto insurance. Florida, the Sunshine state, saw a four percent hike in May. Economists and industry experts say that even with the federal government expressing optimism over the state of the economy, more states are expected to see climbing car insurance premiums.
Economists also point out that insurance firms are losing more money because of the weak performance of their investments inside and outside the U.S. With the worst recession in 50 years still dealing a strong blow to Wall Street, providers are looking for other ways to increase profits. Analysts say that the economic conditions are forcing companies to hike premiums and pass on losses to their clients.
Parts producers and auto repair shops are also facing more difficult times ahead as car owners are slashing auto expenses. Experts are seeing more Americans forego repairs for minor fender benders, forcing repair shops and parts manufacturers to take a back seat and bear the grunt of the economic slowdown. According to analysts, the weaker demand for car parts helps push prices up and consequently, even insurance premiums.
With no end in sight yet for the recession, experts are cautioning car owners against rash purchases of insurance premiums. The best way to save money, they contend, is to shop around and compare prices.