Smarter Cars, Higher Rates: Why Your Auto Insurance Keeps Getting More Expensive

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Rising car insurance rates are becoming a real burden to American drivers. A big factor is the cost of repairing the high-tech gadgets that come standard in new cars. These tech features are supposed to keep us safer, but how can we balance safety with auto insurance rates?

Huge Spike in Auto Insurance Rates

Over the last ten years, a steep rise in the average annual cost of auto insurance has left drivers feeling like they’ve been hit by a bus. Rates have risen almost 30% over that time, and the hike can’t be explained by inflation or the cost of new vehicles. Nor does it have anything to do with the number of crashes during that decade; in fact, there are fewer accidents today than there were in 2011.

So what gives? The Zebra, an online insurance marketplace, analyzed auto insurance rates for 73 million customers in the US and found some surprising statistics. They concluded that the average driver will spend $1548 on car insurance this year. Despite the fact that some states have actually seen falling rates (by anywhere from .4-5%), the overall trend is rising prices.

The High Costs of Safety

While there are a few things you can do to lower your rate–improving your credit score, increasing your deductible, and paying your yearly rate in full instead of monthly–some factors are simply out of your control. That includes the huge cost of replacing the cameras and sensors that make up a vehicle’s safety package in the event of a crash.

“Technology is playing a bigger role than ever in pricing,” says Nicole Beck, The Zebra’s communications chief. “It’s not actually making it cheaper for people.”

Safer, yes. Cheaper, no. You could argue that there’s no way to put a price on safety, and that higher auto insurance bill is just the cost of driving on America’s roads today. Safety features such as backup cameras are found in almost all new cars, and other advanced developments like automatic parking and lane awareness are becoming more common.

These features should, in theory, prevent accidents. You’d think that would drive insurance costs down. However, the main issue seems to be that the insurance companies are not convinced that the cost of repairing or replacing all that high-tech equipment is balanced by the benefit of reduced accidents.

All those bells and whistles might be great for safety, but they’re not going to do anything for your wallet. Most auto insurance companies aren’t offering breaks for drivers who choose cars with advanced safety features. And all of us are paying more to offset the costs of high-value repairs.