Does your car insurance go up every year? Even if you haven’t had an injury in the past year, chances are you have. Several reasons can explain this increase in car insurance rates. The Auto Selection Blog goes around the question.
Decentralization of insurance contracts
The decentralization of the management of car insurance contracts was greatly favored by the Hamon Law, promulgated in August 2014. These contracts are now designed by insurance companies and no longer by the state. After this law, insurance companies were able to free themselves from most of the restrictions of conventional auto insurance contracts to better meet consumer demand.
The insurance companies have also had the freedom to offer coverage options that were not mandatory before. Consumers could thus choose the guarantees that suited them best without obligation.
This resulted in an increase in the prices of car insurance policies, especially for third party car insurance policies.
The advancing technology
The technological development also explains the increase in the price of insurance contracts. In fact, car manufacturers have invested a lot of money in technology and in connected entertainment. These developments in vehicles sometimes lead to road accidents attributable to these technologies.
The technology will soon be a means of safety for motorists, motorists will be able to take advantage of it to inform their relatives in case of an accident or warn them in case of damage to the vehicle. These technological developments are expensive, and are therefore passed on to the insurance price.
The price of labor and spare parts increases
In 2013, insurance rates increased by 3 to 4%, while the cost of labor increased by 9.8%. This difference is explained by the fact that the insurance companies are in competition with each other. Thus, prices cannot increase indefinitely, insurance companies are obliged to compensate for the increase in income by an increase in profit.
However, the price of labor is rising more strongly than the other costs, which explains the price increase.
Spare parts are very often guaranteed by the manufacturer, that is, in the event of a problem, it is up to the latter to intervene. This warranty is limited to 1 or 2 years, which means that after this period any defective or damaged part must be replaced by the manufacturer under its conditions and prices.
The price of car insurance is thus increasing, in fact insurance professionals have been required to reduce their rates, but the tax breaks have been transferred to insurance rates.
Increasingly expensive repairs
Car repairs are becoming more and more expensive, and insurance companies therefore have to pay a higher sum. This partly explains why car insurance prices have risen.
Motorists who need car insurance can compare offers via a comparator, but of course also directly with insurance companies. Large insurance companies often offer basic offers at low prices, but drivers also have the option of choosing insurance with more guarantees, which will necessarily be more expensive.
More and more registrations
New registrations have increased by 10.2% in 2018, which is particularly important as it is primarily these vehicles that are insured. More and more young drivers have insured their cars through insurance for young drivers.
This increase in registrations significantly increases the demands on car insurance premiums. Many insurance companies therefore offer promotional offers, either by lowering their insurance premium, or by offering the usual guarantees as a bonus. This commercial policy allows insurance companies to generate more sales and thus expand their customer portfolio.