Insurance.com RateWatch for Car Insurance: 2008 Marks Year of Record Increases

CLEVELAND--(BUSINESS WIRE)--2008 marked the biggest jump in car insurance rates in five years, with an annual increase of 8% over 2007, according to a new study by Insurance.com, the largest online auto insurance agency in the United States.

“The rate increases throughout 2008 were ill-timed for consumers, who are struggling to pay bills or are facing serious financial difficulties”

According to Insurance.com RateWatch, overall car insurance rates rose from $1810 at the end of 2007 to $1954 in 2008. This was the first year that rates were on the rise since 2003, adding to the many financial challenges already facing consumers throughout 2008.

RateWatch data from the 4^th quarter shows the lowest car insurance quotes, on average, were up $5 over the previous quarter, rising from $1949 per year to $1954 per year. This smaller increase followed three consecutive quarters of steep increases, including a 3% increase in the third quarter and a 3.4% increase in the second quarter. RateWatch is based on real-time auto insurance quotes from more than a dozen insurance companies at Insurance.com.

Among the top 10 states seeing the sharpest increase in car insurance rates in the 4^th Quarter were Washington, D.C. (up 10.5%), Utah (up 10.2%), Colorado (up 6.1%), Delaware (up 5.6%), and Wyoming (up 5.5%). Rates are starting to fall or at least increase more slowly in the West and Southeast. The full report is available at www.insurance.com/ratewatch.

“The rate increases throughout 2008 were ill-timed for consumers, who are struggling to pay bills or are facing serious financial difficulties,” said Sam Belden, VP of Strategic Alliances at Insurance.com. “We’ve seen an alarming number of customers seeking to re-instate policies that had lapsed due to financial hardships. This marks the beginning of a worrisome cycle when it comes to auto insurance, as declining credit scores and bankruptcy filings make it much more expensive for drivers to get coverage, and harder to find an insurer willing to cover them.”

Many insurers use credit information to determine a driver’s insurance risk score, which is used to help set insurance rates. Consumers with a history of being late on credit card bills, or opening and closing bank or credit accounts, are more likely to pay higher insurance premiums. Consumers facing personal bankruptcy will face a significant impact to their credit rating and may be considered high-risk for future insurance coverage.

In these increasingly difficult economic times, Insurance.com advises consumers to be even more vigilant about maintaining good credit, and offers these tips for consumers:

Protect Your Credit

While one late payment won’t cause big problems, a pattern of missed payments will change your insurance risk score as well as your ability to get credit in the future. If you are having trouble paying the minimum amount due on a credit card bill, car loan, mortgage payment, or student loan, call your lender before the due date to explain the situation. Most lenders will work with you to explore payment options. Being proactive will help you protect and preserve your credit rating.

Avoid a Lapse in Coverage

Driving without insurance is against the law. Not only is this dangerous, it also ends up costing drivers with lapsed policies thousands of dollars when they go to get car insurance again. Having a lapsed policy – caused by not paying a bill on time or by allowing a gap between a current policy and a new policy – can be a red flag for insurance companies. Call your carrier to explore monthly installment options and to make sure you’re getting all of the discounts you’re entitled to.

Shop for a New Policy

Compare several companies to make sure you get the coverage you need at the right price. The potential for savings is significant. According to an Insurance.com study, customers saved an average of $595 when they shopped on our site and switched carriers. These days, $595 can go a long way towards meeting other demands on the household budget.

About RateWatch

RateWatch for Car Insurance compares the lowest average car insurance rates quoted to consumers visiting Insurance.com in the 4th quarter of 2008 to the rates quoted in the prior quarter. The rates consumers viewed, but didn't necessarily purchase, come from auto insurance quotes consumers received from over a dozen of the nation's leading auto insurers. Over the course of a year, Insurance.com provides car insurance quotes to more than 1 million people visiting the website or calling for a quote. While RateWatch for Car Insurance is a broad indicator of pricing activity in the personal auto insurance marketplace, it is not a comprehensive index as it reflects only the quotes of companies Insurance.com represents in the 47 states where it quotes (all states except Alaska, Hawaii, and Massachusetts). Due to market changes, the New York rate change is not available this quarter. For more information, go to www.insurance.com/ratewatch

ABOUT INSURANCE.COM

Insurance.com is the leading online independent auto insurance agency in the United States. Our innovative technology allows consumers to link directly to the rating systems of more than a dozen top insurance companies. We streamline the shopping process for consumers, empowering them to instantly compare rates and make the smartest decisions for their insurance needs. Since 2000, millions of drivers have benefited from using our online shopping experience or speaking with our expert, licensed agents by phone. Headquartered in Solon, Ohio on the outskirts of Cleveland, Insurance.com also offers information for life, health and home insurance.