Who, What’s To Blame For Spiking Auto Insurance Costs?

By Brian Maass

DENVER (CBS4) – Auto insurance premiums are on the rise in Colorado and the insurance industry says you can partly blame all those new Colorado residents, lower fuel costs and new-fangled cars.

“In many cases double-digit increases for drivers,” said Carole Walker of the Rocky Mountain Insurance Information Association, a trade group representing the insurance industry. “Unfortunately the marketplace factors are lining up so that most people will see an increase, some a dramatic double-digit increase.”

CBS4's Brian Maass interviews Carole Walker of the Rocky Mountain Insurance Information Association (credit: CBS)

CBS4’s Brian Maass interviews Carole Walker of the Rocky Mountain Insurance Information Association (credit: CBS)

Richard Levison of Longmont recently saw what he considered a dramatic increase in his auto insurance premiums, even though he says he and his wife haven’t received a ticket nor been in a collision in a decade.

“Outrageous comes to mind. Over the top and unfair,” said Levison when he was asked to describe the notice of increase he received. “That was much higher than I would have expected.”

He said when he pressed his insurance company for an explanation of why his rates were going up, he was told it was related to his credit score. But he told CBS4 his excellent credit score rating had only increased in recent years.

Richard Levison of Longmont is interviewed by CBS4's Brian Maass (credit: CBS)

Richard Levison of Longmont is interviewed by CBS4’s Brian Maass (credit: CBS)

Many Colorado residents like Levison, who have unblemished driving records, are seeing their premiums rise anyway as the insurance industry implements across the board increases to make up for what it says are increasing losses.

“Colorado now is seeing insurance companies barely breaking even with what they are taking in in premiums and what they are paying out in claims,” said Walker.

But why? One factor is the number of people moving to Colorado — more than 100,000 new residents between 2014 and 2015. Walker and the industry say that means more drivers on the road which adds up to more collisions.

(credit: CBS)

(credit: CBS)

“Unfortunately that affects what we pay for insurance. That often adds up to more claims,” said Walker.

Another factor — the lower price of gasoline, now just over $2 per gallon, down from a high of around $4 per gallon.

“We have more drivers out on the roadway because there’s lower gas prices. Instead of getting on a plane, they are getting in their car to drive,” said Walker. Again, she says that translates into more crashes.

Last year Colorado saw a nearly 12 percent increase in fatal wrecks compared to the previous year.

And all those fancy gizmos on newer cars designed to keep us safer? They may prevent accidents, but when crashes occur, it’s more expensive to repair the bumper with embedded sensors and a rear facing camera.

A bumper camera (credit: CBS)

A bumper camera (credit: CBS)

“When we had a bumper that was a $600 repair, now that bumper has a camera in it and that’s one of the things that gets hit most,” said Walker.

It could be worse. In Georgia, Allstate reports increasing rates 25 percent citing a 21 percent increase in traffic fatalities last year and more miles driven compared to the national average.

Walker says Colorado has the fourth-highest growth in insurance damage claims and ranked second in increased collision repair costs and second in hail insurance claims, contributing to the increases in the state.

As for Levison, he didn’t just accept his higher premiums. After he was notified of his increase he said he shopped around and was able to buy auto insurance coverage from another company that was comparable in cost to what he had before.

“I don’t think we need to take increases laying down. It doesn’t mean we have to buy it and just keep doing it,” said Levison.

CBS4 Investigator Brian Maass has been with the station more than 30 years uncovering waste, fraud and corruption. Follow him on Twitter @Briancbs4.

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