Smart Car Tech to Blame For Skyrocketing Auto Insurance Rates

Americans love their technology, and our vehicles are not exempt from these developments. Typically, we’re all too thrilled to get a car with a back-up camera, assisted driving, internet connectivity, security systems, or “infotainment” consoles. And while consumers expect to pay more for these features, there’s now an unexpected cost for such technology: higher auto insurance rates.

A dented front bumper didn’t used to be a big deal. But now that those bumpers often contain collision avoidance sensors, it’s no longer a quick fix. Overall, smart technology makes cars much more expensive to repair. Those repair costs are now being reflected in the cost of car insurance from companies like State Farm and Allstate.

While the average auto collision claim in 2015 was around $3,350, that number undoubtedly increases with the use of these expensive technologies. In order to cover the cost of repairs, State Farm previously raised auto insurance rates throughout Illinois by 2.7% this past February. But the latest increase raised rates by 5.9%. The increase affects every one out of three drivers in Illinois.

Allstate Insurance raised its car insurance rates this summer as well, by an average of 6.9%. Following in those footsteps, Geico also has plans to raise its auto insurance rates. Next year, Illinois policyholders can expect to see an average rate increase of 3.5%.

And even though technology plays a pivotal role in these increases, it’s not the only reason insurance companies are scrambling to cover their costs. Because the price of gas was lower than usual, more drivers decided to take their cars out for a spin. With more drivers on the road — many of them partaking in distracted driving behaviors — the number of accidents increased. These factors contributed to the higher claim costs, all of which need to be covered by insurance premiums.

And these premiums may continue to increase for some customers. Allstate has said that they will continue to monitor the cost of claims to assess whether additional hikes are needed.

However, the insurance companies admit that these smart car features — especially those that help keep drivers safe — are worth the cost. Meghan Sporleder, a spokeswoman for Allstate, says that they “absolutely support technology that saves lives and minimizes injuries. But that comes at an increased cost.”

Although it’s important to keep yourself safe while behind the wheel, it seems that some drivers are having to deal with an undue burden just to stay that way. And while Illinois drivers are the ones being affected here, it may be only a matter of time before insurance premiums start to rise throughout the United States.

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