Utah Auto Insurance Rates
The state of Utah is very unique. It has historically been a profitable and predictable state for insurance companies. But, the only constant in life is change. Utah has historically had some of the lowest insurance rates in the nation. Utah is widely known for big family’s and having family values. This translates into the auto insurance world in a couple different ways. First, There are a lot of family vehicles on the road, which have a lot of safety features and typically have a good safety rating from the IIHS. Second, the driving habits of most Utah drivers are better than most other states. People are generally generous and courteous to other drivers around them. It also helps that Utah is a large state with a population that is much lower than most other states, so there are simply less people using the roads. So why are rates continuing to go up in the State? Lets break it down.
The population of Utah has been exploding in recent years. This is contributing to the increase in Utah auto insurance rates. A recent article from the Salt Lake Tribune stated
“Utah’s population continues to boom — adding 59,045 people this year (2017), the equivalent of plopping in another Taylorsville. Mainly, traditionally big-family Utah is seeing fewer births: they dropped by 1,202 last year, continuing a nine-year streak of declines. Meanwhile, migration accounts for more of the state’s growth as its healthy economy serves as a magnet to job seekers.”
The economy in Utah is great! It’s drawing in a lot of people from all across the county, and they are adding a lot to the already growing economy and diversity of the state. But as more people move in, roads that use to be uncrowded or empty are becoming too small to handle the increased traffic. New road are being built and major intersections are being overhauled. This is all very good for the state as a whole, but it is becoming increasingly unpredictable for insurance companies simply because of the increased traffic on the roads, and of course, the increased number of traffic accidents that go along with those bigger numbers. Utah auto insurance rates will continue to rise to keep pace with the higher number of people on the roads, traffic accidents, and overall increased payout amounts.
Insurance companies are trying to walk a fine line of maintaining profitability, while trying to not make underwriting guidelines too restrictive, and trying to stay competitive on rates all at the same time. It is a delicate balance and it will take time to find their niche and capitalize on it.
The Salt Lake tribune also stated regarding migration to Utah:
“They are going to bring the characteristics from the outside world, rather than have the characteristics of the population that is already here. That intensifies the change process, the diversification along the lines of culture, nativity, language, ethnicity, origin.”
These changes also include changes in driving behavior. Utah has gone from predicable and profitable, to very unpredictable, and in some cases unprofitable as well. Insurance companies are still trying to catch up to Utah’s population growth and these new behavioral changes. In a lot of cases, companies have not been charging enough premium for auto insurance and are now realizing that they are behind and should have been increasing over time to keep pace with these changes. A lot of the reason for this is because these changes are happening very quickly. There is no end in sight to these changes. As the economy continues to grow, the state’s population will continue to grow and will become more diverse and unpredictable.
The state of Utah has been seeing a trend of less than favorable profitability numbers. These trends were generally seen in other states but not here in Utah. As more and more people from across the county move into Utah, we are seeing the trends of other states become more prevalent here in Utah. Overall driving behavior is changing with the growing and expanding diversity of the state.
A lot of companies are trying to counter this with stricter underwriting guidelines and requirements. There guidelines make it harder to find a policy if you have some tickets or accidents on your driving record, but they also make rates more stable because the claims and payouts will be more predictable.
The Price of an Accident
The overall amount of money that insurance companies are paying out for accident is increasing dramatically. Even a seemingly minor accident can cost tens of thousand of dollars. Think about this. Even just 10 years ago, if you rear ended somebody in traffic and the car that you hit needed a new bumper and a little body work, its a quick stop to the body shop, and about $500-$1,000 later everybody is on their way. Now it’s completely different. I recently had a client that rear ended a new Escalade. They were only going about 20 mph. the bumper itself was already expensive, but what really makes the costs skyrocket is what you can’t see. Under the bumper are 5 sensors, all of which had to be replaced. When it was all said and done, the claim was over $15,000 for a minor accident. These accidents happen every day all over the state. There are also major accidents that have even more property damage implications as well as bodily injury damages that can easily costs well over $100,000, and even into the millions. That is a good argument why everybody should have high liability limits, but that’s an article for another day!
The Utah state minimum property damage limit for a personal auto policy is $15,000. This means that if you cause an accident. the most your policy will pay for property that you damaged is $15,000. Nobody should have limits that low, and if any agent or company ever tries to sell you a policy with that limit, run for the hills! Take a look around next time you drive down the street. how many cars do you see that are worth over $50,000. There are a LOT! Some that you may not even expect to be that expensive. A brand new 2018 suburban with all the options goes for well over $70,000! If you get into a serious accident with a vehicle like that, and you have limits high enough, they are paying a lot of money to either repair or replace a very expensive vehicle. If your limits do not allow for a payout that big, guess who is on the hook for the bill? That’s right! You! The insurance company will only pay out up to the policy limit.
As car purchase, service, and parts prices continue to increase, so will auto insurance rates.
obviously, car accidents have a potential to cause major bodily injuries.
“NHTSA reports the number of people killed on the road in the U.S. soared 7.2% to 35,092 in 2015, marking the deadliest year on the road since 2008. Though the increase was widely expected after NHTSA last month revealed a preliminary estimate of a 7.7% increase, the official figure solidifies 2015’s dubious distinction as the first year-over-year increase since 2012. In addition, roadway deaths of pedestrians and cyclists hit a two-decade high in 2015.
New findings from the Insurance Research Council’s (IRC) Auto Injury Insurance Claims Study shows that medical expenses reported by auto injury claimants continue to increase faster than the rate of inflation, in spite of the fact that the severity of the injuries themselves remain on a downward trend. From 2007 to 2012, average claimed economic losses (which include expenses for medical care, lost wages and other out-of-pocket expenditures) grew 8 percent annualized among personal injury protection (PIP) claimants. Among bodily injury (BI) claimants, average claimed losses grew 4 percent. Over the same period, measures such as the percentage of claimants who had no visible injuries at the accident scene or who had fewer than 10 days in which they were unable to perform their usual daily activities provided evidence of a continuing decline in the severity of injuries.”
As the vehicles we drive get safer and as technology makes accidents less frequent, the cost of medical expenses from auto accidents continues to rise. There are a few reasons for this trend. First, the cost of medical treatment is extremely expensive, even a minor crash can involve a very significant amount of medical costs. When you get into major accidents with severe bodily injury or death, the damages can easily reach well over $1 million. Second, Litigation. Next time you see a billboard with a personal injury attorney showing how he got millions for somebody in a relatively minor accident, just realize that is another reason that auto insurance rates are going up. Lawyers do good work and help a lot of people, but just like any industry, there are those that take it too far and end up hurting far more people than they help.
A loss ratio is the ratio of the amount of money paid out in claims to the amount of written premium. In 2010 the average combined loss ratio for the top 10 insurers in the county was 99.7% which means that they were just barely making a profit off of all the auto insurance policies that they had written. In 2016 , the ratio increased to 107.1 among those same top 10 insurers, which means they were paying out 7.1% more money than they were taking in in premiums. Obviously this does not work for very long and measures have to be taken to get the loss ratio back down under 100%. What’s the first thing they usually do? Raise insurance rates! There are other underwriting changes that can be made as well, but when they bring in more money from higher rates, the effects are immediate.
As insurance companies still try to figure out the ever changing landscape of this great state, we will continue to see rates increase and follow the trends of so many other states. Eventually each company will find what works for them, and as they get their loss ratio’s back down to a reasonable percentage, we should see rates level off and maybe even come back down a little. How long will that take? Only time will tell.
What Can You Do?
There are a few things you can do to try to keep your rates steady and under control.
First, shop around. That’s where we can help! We represent multiple insurance companies so we can shop around for you! We are not tied to one company, so we have many more options than a lot of other insurance establishments. Let us do the work for you!
Second, Call you agent. If we are your agent, give us a call if you have a concern. We will look through your policies and make sure you are getting all appropriate discounts and getting the best rate possible. If necessary, we can shop your polices around again to see if another company that we represent is offering something with a better value for you.
Third, consider increasing your deductible. Your deductible is the amount that you, the customer, are responsible to pay in the event of an accident. This is meant to avoid very small claims being filed. If you are in an accident and your deductible is $500, you would pay the first $500 and the insurance company would pat the rest. Obviously, the lower your deductible, the higher the price of the policy will be. The opposite is also true. If you increase your deductible, the overall price of the policy will be less. The standard deductible on an auto insurance policy is $500. If you feel comfortable with it, there are options of $1,000, $1,500 and even higher. I don’t recommend going too high because an accident would still cost you a lot of money even though you are paying for your insurance policy. There just would be as much for them to cover.
Fourth, Consider bundling. There are large discounts for doing an auto policy with a homeowners/renters bundled in as well.
Make sure you are doing your part to keep rates down by following these steps and also driving responsibly!
We would love to help you with your insurance needs! visit out home page at www.grandviewinsure.com we would love to help you navigate the insurance waters!