Insurance specialists and concerned policyholders are expressing apprehension over the possible increase in insurance costs if more American carmakers close shop. According to experts, if the current economic crisis forces major automakers to shut down, there could be a domino effect in the insurance industry.
Analysts explain that insurance companies determine rates and premiums based on several factors, one of which is the availability of parts and repair services. Some vehicles and car models are more expensive to repair or replace in the event of an accident. The collapse of a major car manufacturer can mean spare parts that are harder to find. This can help drive up insurance costs significantly.
The availability of parts plays a crucial role in how insurers determine rates. Popular car models with abundant supply of parts and services tend to be much cheaper to insure than vehicles from discontinued brands. Generally speaking, fewer parts available means more expensive replacements. This is then passed on to the car owners who will have to pay more for insurance.
The discontinuation of a particular car brand or model can also present problems to car owners when it comes to finding specialized repair services. Not all vehicles are made in the same way. Because of this, some car models often require specialists who are experts in handling the car problems of specific vehicle models. This can drive up costs significantly.
According to insurance experts, motorists should consider all the possibilities before deciding on a car to purchase. They recommend researching all known car parts distributors and checking on the financial status of the carmakers. Knowing how the companies fare financially can help them gauge their survivability especially now with the ongoing economic slump.
Policyholders unfortunate enough to own cars that have been discontinued or were once made by defunct automakers can still find ways to slash their insurance expenses. For instance, car owners can choose to increase deductibles and shoulder a portion of the repair expenses needed for their vehicles. They can then look for spare parts and specialized repair services on their own without employing the services of their insurer. However, specialists say that policyholders should only do this if they know how and where to find replacement parts for their vehicles.
And then of course, motorists can take advantage of the broiling price wars between highly competitive insurance companies. Because of the increasing competition among insurance providers, most insurers are slashing rates and premiums to attract more customers.