Annual premium rates keep rising

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No matter what your point of view, it seems everything costs more each year. If you’re a consumer, you notice this because unless your pay also rises, it gets harder to make all the payments on your family budget. If you’re one of these corporations that the Supreme Court says are just like ordinary people, all the other corporations keep upping their prices so everything costs more. That’s why you have to increase your prices to help pay all the bills.

That may seem a little abstract so let’s come to car insurance companies. If you have an accident, the tow companies hike their prices to collect your vehicle from the site of the wreck, they charge more for storing your vehicle waiting for the claims adjuster to come, the replacement parts supplied by the manufacturers increase in price each year, the repair garage charges more per hour to fit them, the rental companies charge more to give you a replacement vehicle while your’s is off the road, and so on. It’s a nonstop battle to keep up with all the price rises and, to keep the insurers profitable; they have to increase the annual premium rates. At least that’s their excuse.

The latest survey shows both homeowners and car insurance rates were increased in almost every state in 2013. Across the nation, this has produced an average increase of 2.5% in car insurance rates which is in line with the rises over the last five years. The homeowners rates have risen by an average of 5.1% with the residents of Oklahoma told to pay 12.1% more than in 2012. For the record the national inflation rate in 2013 was 1.6%. This is important because it currently justifies the Fed pumping more money into the economy. When inflation starts to rise, interest rates will increase to damp down borrowing. The only explanation for the unusually high increase in the homeowners’ rates is the extent of the damage caused by more extreme weather events.

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Which states have paid the most?

Looking at the rate filings published by Insurance Commissioner in every state, the car insurance rates have risen the most in:

1. Michigan 8.6%
2. Georgia 5.2%
3. New York 4.3%
4. Delaware 4.3%
5. Nevada 4.1%

At the other end of the scale, no state recorded a fall in rates. North Dakota, however, remained the same. The following states showed increases less than 1%:

Florida
Hawaii
Maryland
Maine
Montana
North Carolina.

It’s interesting that, for once, California does not fall into this lowest group. Over the last twenty years, the state has performed the miracle of holding the cost of car insurance steady, i.e. rising only at or about the same rate as inflation. As an aside, California has managed the trick with homeowners insurance where the annual rates have fallen by 3.4%. It’s a tragedy more states cannot be persuaded to pass their own Proposition 103 to bring insurance companies under proper control.

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