Many people ask, “If I am supposed to get a renewal discount, why do my premiums seem to increase with each renewal?” The answer is not always so simple. Each year, new vehicles cost more then they did the previous year. It will probably cost more to fix a damaged vehicle than it did last year, or five years ago when you first bought your current policy. However, in many cases, your renewal premium will be less. Some factors that contribute to decreases in your premiums are straightforward. According to the Insurance Information Institute (I.I.

Why? The number of auto accidents is on the decline due to better drivers and safer cars as well as crackdowns on fraud and abuse. However, due to the rising costs for medical care, vehicle repairs and skyrocketing jury awards the potential of price increases remain a problem. Rising automobile theft rates and fraud will keep costs higher for motorists in some states, such as Florida, Massachusetts, and New York. The projected increase represents a substantial slowdown from 2003 when auto insurance costs rose by 7.8 percent, the I.I.I. observed.

Unfortunately, even though drivers are filing fewer claims these days, the claims that are filed are costing the insurance companies more than they used to. It is costing more to repair cars as the amount of damage sustained in crashes is up from what it was a few years ago. Some in the industry feel this is due to accidents involving sport utility vehicles. The cost of medical coverage is also increasing. This year insurers could pay as much as $20 billion in medical claims. Higher costs for hospitalization, medical care, medication and associated legal costs are also to blame.

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