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Distractions Drive Up Auto Insurance Premiums

YOUNGSTOWN, Ohio — On the same weekend in August, separate automobile accidents cost a Warren man and a Poland man their lives. The common thread? The Ohio State Highway Patrol says both drivers were distracted.

The National Highway Traffic Safety Administration reports that of the 48,613 fatal car crashes in 2015, 7% involved some form of distraction.

Conversations, eating, shaving, applying makeup, adjusting the radio or air-conditioner – these are a few common distractions that have resulted in auto accidents. And as the rate of distraction-affected accidents increases, so have auto insurance rates.

“Almost every insurance provider is seeing rises in auto insurance rates,” says Pat Gilmore, personal lines manager at Paige & Byrnes Insurance in Warren. “Nobody has gone into double digits and we’re hoping it stays that way. But people will continue to see rates rise.”

To help get rates down, one thing people can do is stop texting and driving, Gilmore says. Texting and driving usually results in rear-enders, which once incured $500 claims. But as more technology is introduced into vehicles, those claims become more expensive. “Bumpers have backup cameras and blind-spot cameras,” she says. “Now if you bump into someone, you could have a $1,800 claim because of the technology.”

Claims are higher because the technology is expensive to fix, says Andrew Thompson, vice president at Gibson Insurance in Girard. As a result, insurance companies opt to total the car and pay out what the vehicle is worth.

“If the cost to repair is 80% or more of what it’s worth, then most likely the insurance company is going to total the car,” Thompson says. “I’ve seen cars totaled for claims that would be under $2,000. It’s why you’re seeing the increase in everybody’s rates.”

Increases depend on the individual carrier with the larger national carriers seeing bigger increases, Thompson says. But Ohioans have the advantage of living in “one of the most competitive insurance markets,” he adds.

Insure.com reports Ohio is the second-least expensive state for auto insurance with the average annual premium at $919, about 30% below the national average. It’s also one of the most competitive states with nearly 250 insurance companies, including Nationwide Mutual Insurance Co., which is headquartered in Columbus.

“We are in a very fortunate spot as far as costs go,” Thompson says. “We tend to be one of the most inexpensive states for auto and home insurance.”

To stem cell phone misuse while driving, Paige & Brynes’ Gilmore recommends drivers, and parents of teen drivers, implement a mobile app that prevents any calls or texts from coming through while driving. Someone trying to call or text will receive a message that says, “I’m driving right now,” or something similar.

“Youth are the biggest culprits because they are growing up in an age when they are constantly connected,” she says. “Parents can use those apps to program any number that they want into their kids’ phones. Emergency calls will always come through.”

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Why Auto Losses Are Increasing for All Carriers

  • 3.214 Trillion – Number of miles driven in 2016, a 3.0% increase from 2015 and the second-largest year-over-year increase in the last 25 years.
  • 18.3 Million – New vehicles sold in 2016, a 5.0% increase from 2015.
  • 19.2% – Increase in U.S. consumer markets’ total loss auto claims, 2013-2016.
  • 38.6% – Rise in the average cost of bodily injury claims from 2006 to 2016.
  • 1 in 4 – Number of car crashes that involve cell phone misuse.
  • 87% – Percentage of drivers who say they engage in risky behavior while driving.
  • 70% – Percentage of drivers who admit to talking on their cell phone while driving.
  • 42% – Percentage of drivers who say they read texts or emails while driving.
    SOURCE: Safeco Insurance.

Published by The Business Journal, Youngstown, Ohio.