In the past couple of years, the United States has been experiencing a spate of natural disasters which followed close on the heels of one another. There have been hurricanes, tornadoes, storms, and forest fires which have caused extensive damage to properties including cars. While it is not possible to have any kind of control over the occurrence of natural calamities, it is possible to insure your vehicle against such instances. The basic thinking behind insurance is based on probabilities. The higher the probability of a risk the higher are the premiums. To illustrate this point, you’d notice that in the states that have higher car theft rates, auto insurance costs more. When the auto insurance providers began to pay a lot of money for claims against natural disasters, they found it difficult to cope. They would be faced with hundreds of damage claims in the aftermath of a natural disaster. The cost of damage recovery in the wake of a natural disaster runs into billions of dollars. Worse, this claim is not confined to one or two claimants but to the whole set of individuals who got hit. To reduce the burden of claims, the auto insurance companies have decided to hike up rates for natural disaster causes.
This decision is not only for the sole benefit of the auto insurance company. They are trying to implement this decision so that they are able to effectively tackle the claims whenever such a catastrophe occurs. Automobiles are usually the worst hit whenever a natural disaster strikes. The recent hurricanes Katrina and Rita caused millions of dollars worth of damage to cars alone. Auto insurance companies claim that the last two years have been their worst as far as paying huge auto claims goes. Insurance industry pundits agree that hiking auto insurance rates is really the only viable alternative left. Cities located on the East coast of the United States will face higher rates due to increased risk from tornadoes. Similarly, cities towards the northwest US will have higher rates due to heavy snowfall.