Huge payouts due to natural disasters can lead to rise in auto insurance rate


Huge payouts due to natural disasters can lead to rise in auto insurance rateThe damages caused due to natural disasters like earthquakes, fire, winter storms, hurricanes, tornados and floods which hit the nation in the present year cost billions of dollars which broke all records. These disastrous weather conditions led to damage of many homes, auto and business which caused huge loss to a large number of people. It is reported that the 10 major natural catastrophes that occurred this year caused economic damages around $ 50 billion.  However, the damaged property can be replaced if it is insured. This has lead insurance providers suffer huge losses particularly by the auto insurance providers.

There has been great damage caused to the cars and other vehicles due to the catastrophic weather conditions and as a result people in order to get their vehicles back claimed for their losses. The insurance companies had to pay huge sums of money for such claims. The insurers had to suffer huge losses because large payouts they had to make and now there are chances of increase in auto insurance rates. According to experts the auto insurance providers may charge high premiums from the people with the aim of recovering some of their losses.

A veteran agent is of the view that this year has been really expensive for the auto insurance providers because the natural disasters have caused huge damage to the vehicle owners who in turn passed on their losses to their auto insurance providers. And now it is obvious for the auto insurance providers to increase the auto insurance rates so as to increase their revenues. Many people have now started wondering how much premium they will have to pay in order to take an auto insurance policy in the coming years.

Although, the auto insurance companies may be looking forward to increase the auto insurance premiums in order to recover the losses they had to suffer due to the damages caused by natural disasters like earthquake, fire, floods, hurricanes, winter storms, tornados, etc but it is essential for them to get the approval from the regulatory authorities before implementing the increase of auto insurance rate in any state lawfully.

The auto insurance providers are of the view that the insurance rates are not in accordance with the risk in many states and there is a need to include the frequency and severity of the disasters caused by the extreme weather conditions while determining the auto insurance rates.