It’s supposed to be a happy new year, right? Not if you’re a car owner. It’s no secret that big-name insurance companies made, some would say, unwelcome policy changes in 2015, and now Illinois’ largest insurance provider (and the country’s, for that matter) is on the verge of doing the same in 2016.
Starting in February, State Farm—by far the biggest auto insurer in Illinois—will begin raising policy rates by an average of 2.6 percent, affecting nearly 2.7 million policyholders. It follows a nationwide trend that will see most auto insurance rates increase by 3 percent in the New Year.
State Farm is actually late to the game. Back in December, Allstate increased rates an additional 5.7 percent after instituting a 3 percent hike in early June; Geico, the third-largest insurer in the state, raised rates by 7.7 percent in August following the release of some pedestrian profit numbers (the rate has affected 200,000 policyholders); and the smaller neighbors on the block—Progressive, Nationwide—might be cheaper options but with less options for coverage.
So why’s all this happening? According to all three of the big-name auto insurers, it’s a matter of accidents happening more frequently, claims becoming more numerous and costly, and more drivers back on the road thanks to an improving economy.
That may be partly true, even though explanation seems rather vague and all too-quickly puts the onus on drivers as the root of such hefty increases. It’s worth noting that this is typically the response of insurers when the company’s bottom line doesn’t look so good. So insurers may have valid reasons for wanting to raise rates, but is it, as they say, due to an increase in claims by drivers? For my money, there’s more to it than that.
In Oregon, for example, where the state legislature recently passed a law that would allow consumers “to receive up to the full amount” of their uninsured/underinsured motorist benefits,” advocates of big insurers warned that rates were likely to increase as a result of the new law. Maybe so, but does that mean it’s not worth doing anything to benefit consumers in the event of an traumatic event?
What’s important for drivers to remember is that injury claims, or anything else related to an accident, is probably never going to match expectations between those that have been hurt and the insurer that’s “responsible” for the financials. That’s generally why we have to step in.
As we’ve said before, a little healthy skepticism never hurt anyone. If you’re up for renewal or are shopping for a policy in the near future, keep an eye on those increasing premiums. If you’re not satisfied, the best part of being a consumer is you can always take your business someplace else.