Why Are My Insurance Rates Rising?

I work in the insurance industry here in Alberta and one of the most asked questions these days is "why are my insurance rates rising?"

Certainly, premiums are on the rise, and have been for heading upward for awhile. If you've read any of my previous posts like "Rising Insurance Premiums Partly Caused By Fraud" or "Rising Insurance Premiums Partly Caused By Distracted Driving" you'll know that there are many contributing factors to those rate increases. Still, people will questions why they, as good drivers with no claims, are still getting dinged?

To answer that, we need to go back to the foundation of how insurance works.

We all know that insurance is provides a guarantee of compensation for specified loss or damage, or death, in return for payment of a premium. What people forget is that insurance companies collect the premium payments and pool them, which is then used to pay for losses of the few who make claims in that annual time period.

That "pool" concept is the key to the puzzle, since it doesn't matter if you are a good driver or not if everyone else is getting into accidents, making serious claims, and requiring serious repairs to their vehicles. Everybody pays into the pool to cover the losses of a few but if those few become many and the pool of money runs out, rates will rise!

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 4 Reasons That Accident Costs Are Rising

1. Computerised Cars
   Most vehicles on the road rely on fairly advanced computer systems and damage to this technology is costly to fix.


2. Safety Features
   Yes, they help prevent accidents but when a vehicle with those sensors and other special devices gets into an accident, the cost of repairs is greatly compounded.


3. Windshields
   Just like those fancy safety features in vehicles, windshields are no longer just pieces of glass and have increasingly complex technology built into them that cost more to replace, not to mention the need to recalibrate the vehicle's computer system.


4. Higher Medical Costs
   The damage done in an accident doesn't just occur to a vehicle and people get hurt, requiring medical attention that is getting more costly each year that passes.

Hopefully you used the links and read the related posts on this site that were connected, but you can also check out some on our BlueCircle insurance blog page to help you understand some of the other factors involved in these rate increases.  

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5 Factors Which Also Contribute To Rising Insurance Costs

1. Distracted Driving
   Sadly, this is now the leading cause of accidents and deaths, surpassing even driving under the influence.


2. Weather Related Events
   As mentioned in the related blog post links, hail, flooding, wildfires and other damages relating to extreme weather has caused catastrophic losses.


3. Fraud
   Not just unscrupulous vehicle owners are defrauding the insurance companies, but theft by service providers are also running rampant, including those in the medical profession, towing industry and auto repair and body shop business.


4. Theft
   One in 250 vehicles gets stolen every year in Alberta, some of it even facilitated by careless owners who leave vehicles running with the keys inside.


5. Where You Live
   Yes, certain areas in the province or in a city or town have higher rates of thefts, accidents or vandalism and where you reside is a factor in rating your premiums.