Ailing economy brings auto insurance rates down

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23The bad shape of the economy has seemingly given one benefit to the customers. Careful driving habits combined with intense competition amongst individual insurance companies has helped in bringing the insurance rates down or at least keep it steady according to officials in the industry. The insurance premiums for 20 of the 25 top insurance providers in the state have either decreased or stayed stable. Also, none of the top 10 insurance providers have increased their auto insurance rates.

These numbers largely reflect the average change in the insurance rates by each company based on the changes made to each of the different coverage offered by each company including medical payments, collision coverage and liability coverage.

Under the use and file form of insurance regulation in Arizona, the insurers can alter the rates as and when they deem fit. However, they will have to provide these new rates to the state within 30 days. State Law prohibits the insurance providers from charging rates that could not only destroy the competition but could also be considered inadequate, unfairly discriminatory or excessive.

Rates cannot be deemed excessive though, if there is a reasonable element of price competition and the auto insurance market is one of the areas where annual state reviews have shown intense competition boiling over. The competition along with the effects of the economic crisis has held back many insurance companies from hiking their policy rates. In fact, the economic downturn has also caused a lesser usage of cars in the recent past. If people aren’t driving much either to or from work, the cars are not really building up on mileage. There are fewer cars on the road which also means the probability of accidents is coming down as well. Therefore even insurance companies are paying less money in terms of insurance claim coverage in recent times due to less number of accidents.

Consumers who are aware of the costs are looking at value and with at least 300 auto insurance companies in the state the competition in Arizona is like never before. In fact, only 10 of these insurers have more than 2% of the auto market share. State Farm Mutual Automobile Insurance Co. has the biggest share with 14.2% in the market. The competition drives the rates too. The annual premiums in the state on an average have decreased compared to rates in 2008 before the start of the economic crisis.