KNOXVILLE (WATE) – Across, the United States auto insurance rates are expected to increase by 26 percent, according to a new study by global research company J.D. Power.
The study found that the number of customers receiving an annual rate increase of more than $200 per vehicle has more than doubled during the past four years. J.D. Power found the increase was fueled by a combination of record numbers of miles driven, increased frequency and severity of the collision and extreme weather.
Many drivers said they are not happy with the rate hikes.
“It’s ridiculous,” Farrah Williams said. “I haven’t had any accidents, no tickets, no anything in 10-12 years and the explanation I was given was that the rates in general and it was something solely based on my policy or my driving record.”
State Farm said they plan to increase premiums for new and renewal customers by an average of 4.4 percent across Tennessee starting June 19, 2017. The insurance company said they made the adjustment to cover expected claim costs as they continue to rise in the state.
They attribute the increase in claims costs to several factors including a rise in vehicle and medical costs, the economy and distracted driving.
“Distracted driving has always been a concern, whether the distraction is caused by a newspaper or access to a mobile phone,” said Kip Diggs, a spokesperson from State Farm. “However, our concern has grown, as it has likely become a greater loss exposure. Increased phone usage, enhanced technology, and various other distractions now accessible or available in vehicles are all contributing factors.”
The insurance company says with gas prices lower, more people are also driving, which has caused an increase in claims. Also, with the improvement of the U.S. economy, they said more people are not only driving, but purchasing new vehicles, which increases the cost of claims.
“People are always trying to pinpoint the reason why their rate has gone up,” Stephanie Milani, with AAA Tennessee, said. “It might not have a lot to do with you as the perfect driver. It may have to do with the other drivers that your insurance company insures.”
According to the Tennessee Department of Commerce and Insurance, other insurance providers could raise rates by as much as 8 percent in 2017. Companies with the largest rate changes include Nationwide Affinity Insurance Company (8%), Allstate Property and Insurance company (7.8%), USAA Casualty Insurance Company (6.5%) and United Services Auto Association (6%).
Average car insurances rates by state
Tennessee actually ranks below the national average, according to Insure.com.
Insure.com commissioned Quadrant Information Services to calculate auto insurance rates from six large carriers (Allstate, Farmers, GEICO, Nationwide, Progressive and State Farm) in 10 ZIP codes per state based on a single 40-year-old male who commutes 12 miles to work each day. Rates were compiled in February 2016.
The national average is $1,325, according to the study. Tennesse’s average premium was $1,145.
The study found Michigan has the most expensive car insurance rates in the state, which is attributed to the state’s high medical mandate. Michigan is the only state in the country that requires auto consumers to purchase unlimited, lifetime medical benefits as part of the auto insurance policy.
Montana had the second highest insurance, with premiums averaging $2,297, which is 73 percent higher than the national average. According to Insure.com, there are a number of factors that contribute to the increase in rates, but one of the biggest is Montana’s accident rate. According to the Insurance Institute for Highway Safety, Montana has the highest vehicle accident fatality rate in the country with 22.6 deaths per 100,000 people – twice the national average.
States with the lowest premiums in the country were Wisconsin, Ohio and Maine, according to the study. Factors for low rates include the number of people who are insured on the road, competitive insurance markets, and lack of major cities which helps keep accident rates down.