Why auto insurance can’t compete with premium plans: “Premiums aren’t worth it”
It’s not easy to compare the quality of auto insurance policies in the United States, which means the companies that sell them have a competitive edge.
And the competition may be getting stronger.
“We’re seeing a more competitive marketplace,” says Chris Niehaus, chief executive of CarInsurance.com, an online marketplace for auto insurance.
“But at the same time, premium costs are increasing,” Niekas says.
In the U.S., the average monthly premium for a driver is now about $1,000.
But the cost of a single, catastrophic injury in the U, where car insurance is not typically required, is about $100,000, according to Nieas.
CompareCarInsurance, the leading company for car insurance and car repairs, said it’s seeing a decline in the premium of its policies.
The company is seeing its premiums go up because it’s selling more of its premium policies to people who want coverage but aren’t eligible for a deductible, Niejas says.
“You’re seeing more people who aren’t covered in their own name being covered, and the average cost of that coverage is increasing,” he says.
Auto insurance is still a good investment for most consumers, but it may not be as great for those who drive more than 10,000 miles a year.
But Nieaus says consumers are paying a lot for their car insurance premiums.
“People are paying more for coverage because they’re paying more,” he said.
“The cost of insurance is rising faster than inflation.”
The average premium for new drivers is $2,300.
That’s an increase of about 6% a year, Niesaus says.
And car insurance costs are up by about 15% for every year the cost has been rising, he says, meaning drivers are paying less for coverage now than they did before the financial crisis.
That may not sound like a lot, but the average car insurance premium has increased by about 50% since 2007, according the Insurance Institute for Highway Safety.
Nieaks says consumers should compare car insurance with other insurance plans and pay the higher cost of your own vehicle.
“If you’re driving 10,200 miles a month, then it’s likely that your car insurance policy is going to be about $2 or $3,000 per month,” he explains.