Why Do Auto Incurance Rates Increase Sharply After an Accident?
One of the biggest myths about auto insurance rates is that your auto insurance company increases your rates to recover the money they spent on your auto insurance claim. Not so. If that were the case, only your present auto insurance carrier would be interested in raising your auto insurance premiums. Your auto insurance rates will be slightly higher than they were pre-accident even at another auto insurance provider.

The auto insurance company looks at the accident as an indicator of risk. Just consider the cost of car repairs and in some cases, car replacement, pain and suffering payments, sometimes for more than one person and medical expenses. An increase in your auto insurance premiums would not likely put much of a dent in what the auto insurance carrier spent on paying out your claim.

The higher auto insurance rate reflects the risk of carrying you as a policyholder, and the likelihood that you might have another accident. It is true that you may still be able to find a better deal from another auto insurance company after an accident, but the rate will not be as low as it could have been if the accident and claim were not on your auto insurance record.

But don’t despair, if you can keep your driving record clean for at least three years from your first auto insurance policy renewal after the accident, you can expect to get even better and more inexpensive auto insurance rates.
Detroit’s Auto Insurance Rates Raise Ire of Many
Detroit is not only the capital of car making, but also the capital of high auto insurance rates. Detroit’s auto insurance rates are double the amount of the city that was listed as second place on the list, Philadelphia. This information from the Office of Financial and Insurance Regulation has raised the eyebrows of consumers and politicians alike, who believe the auto insurance rates are disproportionately higher for those living in urban areas.

Currently, Freman Hendrix, a politician running for mayor of Detroit says that if elected he will sue the auto insurance companies operating in Michigan. A factor contributing to the higher auto insurance rates in Detroit is the high crime rate in the city. Vehicle theft leads to many expensive auto insurance claims. Also, the state levels of minimum liability auto insurance are higher than many states according to some auto insurance industry sources.

Whatever the case, the auto insurance rates won’t change overnight. Being smart about the way you buy auto insurance can at least save you as much money as possible in the present. Search for inexpensive Detroit auto insurance quotes using our free auto insurance quote finder. Also take a look at the many articles on how to save money on auto insurance to help you keep your costs down.

Similar posts: auto insurance quotes