On a daily basis our agency receives several calls from client's inquiring about why their auto rates increased and why they are so high compared to 10 years ago.
The answer is no simple unfortunately. There are several factors that place Colorado in the top 5 states for the highest auto insurance rates. Some of the most important factors include:
- Increasing rates of uninsured motorists in Colorado
- Increase in costs to repair and replace vehicles
- Increase in severity of accidents
- Increase in costs for insurance companies when defending their client
- Increase in frequency of hail
- Increase in safety issues including: texting while driving and lack of seatbelt use
- Increase in motor vehicle thefts
There are several other factors that determine the auto insurance rates, however, the list above are the most common and the most highly rated for.
There is an amazing resource in Colorado available to insurance agents and consumers called the Rocky Mountain Insurance Information Association. RMIIA has a plethora of insurance about the insurance industry in Colorado and provides a lot of educational materials regarding home, auto, and business insurance. I would like to quote a few statistics from the RMIIA 2017 Colorado Auto Insurance Facts release:
- 16.2 percent of Coloradans drive illegally without car insurance – this ranks Colorado 9th in the nation for uninsured drivers
- 605 people died in Colorado car crashes in 2016. Up 24% from 2014
- An estimated 85% of Colorado drivers wear seatbelts compared with the national average of 87%. It's estimated that the lack of seatbelt use costs Americans over $20million a year
- The National Highway Traffic Safety Administration attributes 9.9% of all traffic fatalities to distracted driving (i.e. texting while driving)
- In 2015, Colorado reported 14,859 motor vehicle thefts, up 29.6% from 2014
- Hail causes the most insured damage to Colorado vehicles. Colorado ranks 2nd in the US for hail insurance claims
Although rising rates are extremely frustrating and can be hard on a household's budget, there are a lot of elements to contribute to the rising costs. Most clients have the misconception that the increase in premiums are due to insurance carriers being greedy, however, that's just not the case.
Insurance carriers have to raise rates in order to bring in enough premium to pay for the rising costs here in Colorado. When the frequency of accidents, frequency of driver's illegally driving without insurance, frequency of hail, frequency of motor vehicle thefts, all decrease, we will see rates decrease because there is less expense for the insurance carriers here.
We hope we will see improvement in the factors that determine premiums, however, for the near future rates will remain as is.