This month, Allstate New Jersey Property and Casualty Insurance Company requested an overall rate increase of 29 percent with the Department of Banking and Insurance (DBI). The company reported a catastrophic loss of over $1 billion in March alone. Over the past year, the automotive insurance industry revenue has declined over 10 percent, with Allstate falling over 14 percent.
The latest rate request follows on the heels of an approved seven percent increase in February. If the most recent proposal is approved for the full amount, the result would be a rate change of more than 51 percent in the combination of both increases.
For New Jersey drivers with Allstate coverage, the average full-coverage policy, with comprehensive and collision coverage, will see a 39 percent rate change. The full impact of the filings may vary substantially for customers, depending on the terms and individual circumstances of their policies.
The rate increase request is subject to review and approval by the DBI, pursuant to law, and may or may not be approved in total or approved for less than the full amount requested. Whether approved in whole or in part, rate changes will not affect existing policies until they come up for renewal.
Allstate expects to increase profits through digitization, improved efficiency, and leveraging strategic partnerships by restricting new businesses and stricter underwriting requirements in 37 states.
Why Are Insurance Costs Increasing?
Drastic changes to the automobile insurance industry are affecting policyholders across the country. In New Jersey, new car prices have risen 29 percent since 2019, and used car prices are at historic levels. The cost of auto insurance premiums varies from person to person, based on age, location, car type, and driving record, but current economic trends are forcing higher costs on all drivers due to the following:
- Economic inflation: Rising costs of food, goods, labor, auto parts, medical care, and new and used car prices are forcing an increase in insurance costs.
- Social inflation: According to the Insurance Information Institute, the number of people filing or litigating claims has steadily risen in the past few years, increasing insurance company expenses.
- Driving behavior: Traffic fatalities hit a 16-year high in 2020 due to an 11 percent hike in speeding-related crashes and a nine percent rise in alcohol-related crashes since 2019, despite fewer drivers on the road during the pandemic, according to the National Highway Traffic Safety Administration.
Post-pandemic, there are also more vehicles on the roads and average vehicle repair costs have risen dramatically due to a shortage of car repair specialists, supply-chain deficits, and increased vehicle complexities. Vehicle repair and replacement costs in New Jersey have reached an all-time high.
How Can I Lower My Car Insurance Costs?
Not all insurance is the same, and neither is the cost. Some options for lowering car insurance expenses include:
- Shopping around: Research different companies online to analyze and compare coverage and rates. Some websites offer a side-by-side comparison to quickly determine what is and is not covered and costs.
- Bundle: Combining your homeowners, auto, life, and other insurance policies under the same umbrella with one insurer. Many insurance companies offer discounts if you have more than one policy with them.
- Asking for discounts: All insurance companies offer some type of discount, such as savings for multiple vehicles, safe driving records, using their autopay system, or taking defensive driving courses.
Saving costs by choosing the cheapest insurance option is not advised. While the low premium might be enticing, the coverage is typically the state minimum liability-only policy that covers only people and property outside the vehicle. Damage and medical costs under a liability-only policy must be paid out-of-pocket. Opting for a full-coverage policy with a mid to higher premium is more cost-saving should an accident occur.
If you are uncertain about the terms of your auto insurance policy, contact us today. Whenever we have a new client, we review their Declarations page and offer guidance on making changes if needed. Michael S. Williams, Esq. always goes over what everything means. He is happy to review anyone’s insurance coverage free of charge.
Tinton Falls Car Insurance Lawyers at the Law Offices of Michael S. Williams, LLC Help Clients Understand Their Auto Insurance Policy
Our Tinton Falls car insurance lawyers at the Law Offices of Michael S. Williams, LLC can fight for what you deserve. Call us today at 732-351-2800 or contact us online to schedule a free consultation. Located in Tinton Falls, New Jersey, we serve clients in Shrewsbury and Monmouth County.