Every year, more and more car owners have noticed the trend of increasing car insurance rates in Colorado. There was an average $272 increase in car insurance premiums from 2015 to 2018. So, as with numerous car owners, you are probably wondering why your auto insurance rates keep increasing.
Auto Insurance Rates in Colorado
Insurance providers use various mathematical and statistical calculations to estimate car insurance premiums. Also, they often do a detailed and thorough evaluation of applicants. They evaluate factors such as age, claim history, and driving record. In addition, location-specific factors have caused the trending hike in the insurance rates for automobiles in Colorado.
Why do car insurance rates keep on increasing in Colorado?
Location plays a huge part in increasing insurance rates in many states. Insurers consider the location in setting auto insurance rates. Moreover, state laws and distinct degrees of risks present in each state affect the average auto insurance rates.
Specific location variables influence the prices of insurance rates in every state. Also, these factors caused the increasing trend of car insurance coverage in Colorado.
Extreme Weather Conditions
The state of Colorado has experienced a significant increase in extreme weather conditions. Colorado’s residents have experienced hail storms, floods, blizzards, and tornadoes. These disasters resulted in a massive increase in claims, especially in Denver County.
Cost of Living
Inflation affects everyone, and so does business. The increase in the cost of living does not only affect people but also businesses. There’s also a significant increase in business operation costs. Furthermore, the increased business operational costs reflect in insurance premiums.
Insurance companies use two location factors in setting insurance rates for automobiles. The first factor is the state. Also, every state requires car owners to secure an auto insurance policy. Furthermore, the state of Colorado requires a minimum liability coverage that covers bodily injury and property damage.
The second factor is the zip code. In addition, the city where you reside dramatically influences the increase in your car coverage premiums. Every city has specific variables that affect insurance rates.
Some location-specific variables insurance companies look into are:
Insurers tend to set higher car insurance rates in areas with high crime rates. Moreover, crimes like vandalism and car theft can lead to a spike in auto premium rates. Colorado Metropolitan Auto Theft Task Force quarterly reports showed that car theft cases have nearly doubled this 2021. The most affected city is Denver, with more than double the recorded car theft cases.
The higher the population, the higher the risks of accidents, injuries, and property damage. So, areas with high population density have many pedestrians and traffic volumes. Also, these pose an increased risk for vehicular accidents.
Colorado’s population has increased by 14.8%, according to the data released by the US Census Bureau last April 2020. Also, Colorado’s population has been growing rapidly for the past 10 years.
Probability of natural disasters
Natural disasters can cause road accidents and property damage. Areas with a high probability of natural disasters tend to have higher insurance premiums. In addition, the State of Colorado is prone to natural disasters like flooding, winter storms, tornadoes, etc.
There’s a significant decrease in gasoline prices in Colorado. This decrease in gasoline prices makes driving a car more affordable, thus, increasing the number of motorists on the road. Also, growth in the number of motorists on the road increases the risk of accidents.
According to Zendrive, Denver is one of the top ten cities with distracted drivers. Furthermore, Colorado reports around 43 road accidents caused by distracted driving daily. There’s significant use of mobile phones while driving everywhere, not only in Colorado. Also, the use of mobile phones is the leading cause of road accidents worldwide.
Increased Repair Costs
Car repair costs have increased over the years. Also, modern technology and the inflation rate have influenced the rise in repair costs.
Increased Medical Costs
Various factors have caused the continuous increase in healthcare costs in the US. In fact, with inflation, population growth, and aging, healthcare costs are expected to continue to rise for the next few years. This forced the insurance premium for automobiles to go up as well.
Apart from that, there’s a significant growth in motorists. This resulted in a surge of cases of road accidents in Colorado. The rise in car accidents has increased the number of claims insurance companies have to pay. This further skyrocketed the auto insurance rates in Colorado.
Legalized Recreational Use of Marijuana
The legalization of the recreational use of Marijuana has been thought to impact the number of road accidents in Colorado significantly. The use of illicit drugs like marijuana can cause impairment in driving. Driving under the influence of drugs is one of the leading causes of road accidents in the US. Increased cases of car accidents mean an increase in the number of insurance claims. High rates of insurance claims lead to a hike in coverage rates.
Increased Number of Uninsured Motorists
More and more drivers choose to forego the auto insurance policy because of the increasing costs of insurance coverage and cost of living. An accident involving an uninsured motorist can cause substantial medical and repair costs. This forces insurers to increase premium rates. Read more here about Uninsured Motorist Coverage.
Generally, insurance premiums are multifaceted. Numerous varying factors affect the premiums of auto insurance. Aside from the location variables that affect the rate of vehicular coverage, there are more factors that insurance companies look into. These factors play a significant role in the estimation of car insurance rates.
After a long day at work, we often find serenity in our homes, and auto insurance can provide that safety against various accidents and mishaps on the road.
Some of the additional factors that affect car insurance rates are in Colorado:
State Law Requirements
Auto insurance requirements vary state by state. The minimum required coverage differs in every state. The state of Colorado requires a minimum car insurance policy that includes the following:
- $25,000 for bodily injury or death in any individual per accident.
- $50,000 for bodily injury or death for all affected in a single accident.
- $25,000 for property damage per accident.
The State of Colorado’s average car insurance premium is around $1,700 per year. This is 14% higher than the national average and much more expensive than in other states.
Based on statistics, there’s an increased incidence of vehicular mishaps in the male population. Male drivers are more competitive and drive faster, making them more prone to road accidents.
Young and elderly drivers often get higher insurance rates. Research shows young inexperienced drivers have a higher risk of car accidents. Due to old age, elderly drivers usually have visual and reflex problems. These medical problems make them more prone to car accidents. On the other hand, teen drivers still have minimal driving experience and tend to be aggressive when driving, which can also pose a risk of accidents.
Claim history will show if the driver has high liability risks. A high number of at-fault claims will likely increase auto insurance rates.
The credit score displays the customer’s reliability. Studies show that drivers with a good credit history are less risky. Drivers with fewer associated risks are likelier to get better auto insurance rates.
A driving record will reveal driving practices and accident history. This will determine the likelihood of future liability claims. Insurers consider drivers with records of reckless driving and at-fault car accidents high-risk. High-risk drivers often get a higher insurance premium for automobiles estimate.
Experienced drivers are less likely to get caught in an accident than amateur drivers. The longer the years of driving experience, the lower the risk, thus lower insurance rates.
Type of Vehicle
The type, model, and condition of vehicles affect auto insurance rates. Coverage premiums depend on the value of the car. Repairs and replacements for new or luxury vehicles are more costly. Drivers with new or luxury vehicles are typically charged with higher insurance estimates.
Car mileage influences auto insurance rates. The longer and more frequently you are on the road increases your risk of vehicular accidents. Drivers with low mileage often get discounted insurance rates.
Married people are usually classified as low-risk drivers. According to studies, marriage indicates stability and maturity. Insurance providers consider married people less likely to be involved in car accidents.
Car Insurance Coverage in Colorado
Car insurance rates greatly depend on the coverage you will get. Comprehensive protection comes at a great price. While some view it as an additional expense, comprehensive insurance coverage provides protection. It can protect you, your passengers, and other drivers from huge medical and liability costs.
To fully protect yourself from medical and liability costs associated with car accidents, it is essential to avail additional insurance coverage. This will help with expenses excluded from the auto insurance coverage.
Uninsured Motorist Coverage (UM)
With the increasing number of uninsured motorists, getting involved in an accident with UM coverage is not impossible. It is best to add UM coverage to help pay for medical bills, lost wages, funeral costs, and property damage.
Underinsured Motorist Coverage
This insurance policy covers accident expenses associated with an at-fault driver with insufficient liability coverage.
This will cover the medical bills of all passengers regardless of who is at fault.
How to Lessen Car Insurance Rates in Colorado
Even though insurance rates tend to increase year by year, there are still some ways to help lessen your insurance rates for automobiles. Factors that can be controlled are your weapon in lowering your insurance premiums. Follow some guides in shopping for auto insurance in Colorado to get the best price possible.
Drive safely. It could be only two words, but it significantly impacts car insurance rates. Following safe driving practices will keep you safe and lower your insurance premiums. Safe driving practices will lead to good driving and claim history records which can help lower your auto insurance rates.
Safe Driving Practices
- Get proper education about road and safety rules. Being knowledgeable in road and safety rules will significantly reduce the chances of vehicular accidents.
- Follow traffic rules and road signs. Traffic signs and signals are the driver’s way of communicating with other drivers on the road. It helps maintain road safety for everyone.
- Follow the proper driving speed limit. Following the road speed limits decreases the risk of losing control when sudden changes happen in the roadway.
- Always wear a seatbelt. A seatbelt prevents injuries in the event of a car crash.
- Maintain an appropriate safe distance from other cars when driving. Following the appropriate distance gives drivers enough space and time to react in case the front car makes a sudden stop. This will help in avoiding car collisions.
- Avoid distraction when driving. Avoid using mobile phones, eating, and drinking while driving.
- Do not drive when under the influence of alcohol and illicit drugs. Driving under the influence of drugs and alcohol alters focus and alertness.
More About Safe Driving Practices
- Do not drive when sick and take drugs that can affect focus and alertness.
- Avoid driving in extreme weather conditions. Some weather conditions like rain and snow increase the risks of car accidents. If there’s a need to drive, make sure to drive slowly.
- Take frequent rest and breaks for long-haul drives. Proper rest will maintain a driver’s focus while driving.
- Have an annual medical examination. Some medical conditions like visual impairment and heart attack can pose a risk for car accidents.
- Perform routine car inspection and maintenance. It is essential to make sure the vehicle is in good running condition. This will avoid possible car issues that may lead to vehicular crashes.
The price hike in auto insurance coverage may significantly impact car owners’ budgets. But car owners need to see the numerous benefits of insurance. Car owners need to see the good rather than the harmful effects of getting auto insurance. Some may think that there’s no need for insurance coverage for automobiles. But you will only realize the importance of auto insurance coverage on the day you need it. And when that day comes, you’ll see those car insurance premiums are way cheaper than medical and liability costs.
We can help you with that.
We hope we can help you with the average car insurance in Denver, CO. Our team of insurance experts helps customers get car protection coverage at a reasonable price. We partner with various insurance providers to protect clients and their financial needs. Call now, and our competent agents will help you get the best car insurance coverage you need.