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Why Do Car Insurance Quotes Change Daily?

Fran
David Joy May 27, 2021

Why Do Insurance Quotes Change Daily?

Every insurance agency is a risk-mitigating machine that must be constantly recalibrated to optimally respond to a constantly changing risk environment. To think of it another way, every insurance agency is like a corner store that must adjust its prices to account for the store's always vacillating operating expenses and overhead. In a nutshell, that's one reason why auto insurance quotes change daily.

This article focuses on some of the factors that affect the overall market fluctuations in car insurance rates, even though a driver's individual circumstances—age, driving record, credit score, place of residence, make and model of vehicle—certainly affect auto insurance-related quotes.

A Tip for Auto Insurance Customers

Since one insurance company website may offer you one quote on Monday, another quote on Wednesday and yet another quote on Friday, you might want to compare rates by visiting that site regularly. However, it is in your best interest to get up-to-date auto insurance quotes from as many car insurance providers as possible. Since car insurance quotes change daily, insurance comparison shopping is a no-brainer if you are interested in saving money.

Nowadays, many customers get a free auto insurance comparison by using an objective third-party resource that evaluates rates and insurance providers in just minutes. The best online resource for anyone interested in a (free!) auto insurance comparison, SmartFinancial is the most efficient online resource that helps folks to make confident car insurance decisions. Just enter your zip code or call 855-214-2291 for a (free!) car insurance comparison.

Other Factors Why Car Insurance Quotes Change

To be sure, an insurance company may change its own risk assessments, which will have an impact on customer risk ratings as well as your own individual rate. In the upcoming sections, we'll look at some of the major factors that cause general fluctuations in the insurance market on a daily, even hourly basis: inflation, state law, natural disasters, repair costs, medical costs, typical driving habits, high-risk areas and uninsured drivers.

Inflation Affects Auto Insurance Companies

As you've probably noticed, the cost of everything is always going up. The same market forces that increase the cost of doing business for an auto insurance company also increase the car insurance quote for any car insurance policy. Even if you are a driver who has never had a car accident, your insurance premium will still be affected by the ups and downs of the U.S. gross domestic product.

State Law Impacts Auto Insurance

Changes in a state's insurance laws can have an impact on everything auto insurance-related. If you live in a no-fault state, the law will force you to buy personal injury protection (PIP) and perhaps uninsured/underinsured motorist coverage. These additional insurance products will result in a rate hike.

Furthermore, if your state decides to increase its mandated liability minimums, that augmented coverage will be reflected in your insurance quote or premium. Finally, based on a variety of factors, the state may allow insurers to raise their rates.

Natural Disasters Affect Auto Insurance

Hurricanes, tornadoes, earthquakes and floods can trigger a universal increase in the cost of car insurance coverage. When a weather-related disaster hits, car insurance companies must pay millions, often billions of dollars in compensation all at once, severely eroding their earnings and capital. As a whole, the car insurance industry ends up raising the cost of car insurance as a way to offset these staggering outlays.

For example, according to the Insurance Information Institute, Hurricane Sandy resulted in $2.7 billion in auto claims, accounting for 16% of the total value of all Sandy-related insurance claims. About 250,500 vehicle claims were filed, and the average payout was nearly $11,000. As you might expect, car insurance quotes varied widely before and after Hurricane Sandy, regardless of an individual's driving history or, say, credit score.

Car insurers also study changing weather patterns to assess future risk. For example, based on storm and weather data, an insurance company may designate a low-risk area as a high-risk area. If you reside in that rezoned high-risk area, your annual premium will increase when you renew your policy.

Repair Costs Impact Auto Insurance

Like everything else, the cost of auto repairs has gone up across the board, but there's more to this price hike than general inflation. For example, cars today are outfitted with high-end computer technology, which has added another layer of expense to traditional car repairs. Further, since computer-related problems can take longer to fix, the cost of labor rises, too.

In many cases, the price of replacing auto parts has risen because many automakers now patent their auto parts. That means your local shop can't repair your vehicle using a generic, less expensive substitute, so your insurance provider has to pony up more ducats for the name brand.

On the other hand, while collision and comprehensive coverage will pay for any damages to your own vehicle, you can save money by purchasing a vehicle that is cheap to maintain and repair. Based on YourMechanic.com's national averages, here are the top-five cheapest makes and models to maintain and repair over a 10-year period:

Repair Costs

  1. Toyota Yaris subcompact hatchback: $3,289
  2. Toyota Corolla compact sedan or hatchback: $3,247
  3. Toyota Camry midsize sedan: $3,499
  4. Honda Fit subcompact hatchback: $3,673
  5. Honda Civic compact sedan, coupe or hatchback: $3,774

So, if you can somehow manage to resist buying a Porsche 911 sports coupe, which costs $19,600 to repair and maintain over a 10-year period, you'll have saved a nice tidy sum.

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Medical Costs Affect Auto Insurance

When health-care costs go up, car insurance rates go up. As a whole, the car insurance industry must increase the average premium rate to pay for these increased medical expenditures. According to a recent Peterson-Kaiser Family Foundation study, the cost of medical care has gone through the roof. Here are two highlights from that study:

  • On a per capita basis, health spending has increased more than 31-fold in the past four decades, from $353 per person in 1970 to $11,582 in 2019. In constant 2019 dollars, the increase was about six-fold, from $1,848 In 1970 to $11,582 in 2019.

  • In 1970, 6.9% of the gross domestic product in the U.S. was spent toward total health spending (both through public and private funds). By 2019, the amount spent on health care has increased to 17.7% of the GDP. 

So, if you are involved in an at-fault accident that results in another driver's bodily injury, it will cost more to pay for those injuries than in, say, 1976. Furthermore, if you have only $25,000 in bodily injury liability coverage, the higher medical costs will deplete your coverage faster, meaning you may be personally on the hook for the balance sooner.

Bad Driving Habits Impact Everyone's Auto Insurance Rates

When calculating auto insurance-related policies, car insurance companies are reckoning on how much they will have to pay on all claims for the year. Naturally, national driving trends play into the auto insurance experts' overall estimates. Let's look at two examples.

Driving Under the Influence

While you would never drive under the influence, your auto insurance rate can still be affected by others who choose to engage in this reckless, irresponsible behavior. For example, while West Virginia and Kentucky have the lowest percentage of alcohol-related deaths (19%), Montana has the highest percentage (43%), according to the National Highway Traffic Safety Administration (NHTSA). Since Montana drivers face a much greater chance of being involved in a DUI-related accident than drivers in West Virginia and Kentucky—even if all those drivers are as sober as a judge—car insurance companies will take this data variance into consideration when determining insurance rates. In short, the greater the risk, the higher the premium.

Distracted Driving

According to the NHTSA, distracted driving is "any activity that diverts attention from driving, including talking or texting on your phone, eating and drinking, talking to people in your vehicle, fiddling with the stereo, entertainment or navigation system—anything that takes your attention away from the task of safe driving." Distracted driving is a national epidemic that has only worsened with the rise of the cell phone.

In fact, distracted-driving crashes costs Americans about $129 billion a year, the NHTSA reports. The more accidents across the U.S., the higher the insurance premiums for U.S. drivers. In the end, we all pay for bad driving habits.

High-Risk Areas Drive Up Premiums

Essentially, insurance premiums go into a big pot from which all claims are paid. Your auto insurance provider has to charge enough in premiums to cover all its customers in the area.

If you live and park your car in an area that has a lot of claims for car accidents, theft, vandalism or any other reason, auto insurance companies will assume you're at a greater risk of being involved in such an incident. So, your insurance premium will reflect this high-risk reality. Once you enter your zip code in a free car insurance comparison tool like SmartFinancial's you'll compare quotes and get an idea of how much rates are in your area.

Everyone Pays for Uninsured Drivers

One out of eight U.S. drivers has no vehicle insurance. When uninsured or underinsured drivers are involved in an at-fault accident, insured drivers end up paying for these insurance shortfalls. The higher the concentration of uninsured drivers in your state—for example, 20% of drivers in Florida, Michigan, Mississippi, New Mexico and Tennessee have zero auto coverage—the higher your individual premium.

SmartFinancial Compares Auto Insurance Policies

Comparison shopping is best way to find the best, cheapest car insurance. To make confident auto insurance decisions, the savvy shopper is an informed, ready shopper, so be ready to snap up a good quote when you see one. An online resource for anyone interested in purchasing insurance products, SmartFinancial is an objective third-party resource that helps you to explore your coverage choices (liability coverage, add-on insurance) and compare quotes from more than one car insurance company.

Insurance companies may change their auto insurance rates daily, but you can still take steps to get the best deal. The best quote for you may be from the one auto insurance provider you've never heard of, but you won't know unless you take the time to shop around. A free online resource, SmartFinancial uses artificial intelligence and machine learning to find the insurance coverage and price that you want.

To take advantage of SmartFinancial's free quote tool, just enter your zip code below or call 855-214-2291 for help. When you do an insurance comparison, secured networks keep your data safe. So if you have a new car or an older one, see if you can get a better rate and possibly even better coverage for less money.

Get a Free Auto Insurance Quote Online Now.

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