Car Insurance Trends in Colorado: Why Does It Feel Like My Rates Keep Increasing?

Jun 6, 2021 | Personal Insurance

Every year, more and more car owners have noticed the trend of increasing car insurance rates in Colorado. There’s an average $272 increase in car insurance premiums from 2015-2018. As with numerous car owners, you are probably wondering why your auto insurance rates keep on increasing.

Auto Insurance Rates in Colorado

Insurance providers use various mathematical and statistical calculations to estimate car insurance premiums. They often do a detailed and thorough evaluation of applicants. They evaluate various factors such as age, claim history, and driving record. 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 the increase of insurance rates in many states. Insurers consider the location in setting auto insurance rates. 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. These factors caused the increasing trend of car insurance coverage in Colorado.

  1. 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 huge increase in claims, especially in Denver County. 

  1. Cost of Living

Inflation affects everyone, 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. The increased business operational costs reflect in insurance premiums.

  1. Location

Insurance companies use two location factors in setting insurance rates for automobiles. The first factor is the state. Every state requires car owners to secure an auto insurance policy. The state of Colorado requires a minimum liability coverage that covers bodily injury and property damage.

The second factor is the zip code. The city where you reside greatly 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:

  • Crime Rate

Insurers tend to set higher car insurance rates in areas with high crime rates. 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 where there are more than double recorded car theft cases.

  • Population Rate

The higher the population, the higher the risks of accidents, injuries, and property damage. Areas with high population density have a high number of pedestrians and traffic volumes. 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. Colorado’s population has been growing rapidly for the past 10 years.

  • Probability of natural disasters

Natural disasters can cause road accidents and property damages. Areas with a high probability of natural disasters tend to have higher insurance premiums. The State of Colorado is prone to natural disasters like flooding, winter storms, tornadoes, etc. 

  1. Gasoline Prices

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. Growth in the number of motorists on the road increases the risks of accidents. 

  1. Distracted Driving

According to Zendrive, Denver is one of the top ten cities with distracted drivers. Colorado reports around 43 road accidents caused by distracted driving daily. Everywhere, not only in Colorado, there’s significant use of mobile phones while driving. The use of mobile phones is the leading cause of road accidents worldwide.

  1. Increased Repair Costs

Car repair costs have increased over the years. Modern technology and the inflation rate have influenced the rise in repair costs. 

  1. Increased Medical Costs

Various factors have caused the continuous increase in healthcare costs in the US. 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 of motorists. This resulted in the 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.

  1. Legalized Recreational Use of Marijuana

The legalization of recreational use of Marijuana has been thought to have a huge impact on the number of road accidents in Colorado. The use of illicit drugs like marijuana can cause impairment in driving. Driving under the influence of drugs is one of the main 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.

  1. 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 huge 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 big role in the estimation of car insurance rates. 

Some of the additional factors that affect car insurance rates are:

  • State Law Requirements

Auto insurance requirements vary state by state. Minimum required coverage differs in every state. The state of Colorado requires a minimum car insurance policy which includes:

  • $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 other states.

  • Gender

Based on statistics, there’s an increased incidence of vehicular mishaps in the male population. Male drivers are more competitive and tend to drive faster which makes them more prone to road accidents.

  • Age

Young and elderly drivers often get higher insurance rates. According to research, 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 very little driving experience and have a tendency to be aggressive when driving and this can also pose a risk for accidents.

  • Claim History

Claim history will show if the driver has high liability risks. A high number of at-fault claims will likely increase auto insurance rates.

  • Credit Score

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 more likely to get better auto insurance rates.

  • Driving Record

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.

  • Driving Skills

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.

  • Vehicle Usage

Car mileage influences auto insurance rates. The longer and more frequent you are on the road increases your risk of vehicular accidents. Drivers with low mileage often get discounted insurance rates.

  • Marital Status

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 rates greatly depend on the coverage you will get. Comprehensive protection comes at a great price. While some people view it as an additional expense, comprehensive insurance coverage provides overall 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 important to avail additional insurance coverage. This will help in expenses excluded from the auto insurance coverage.

  • Uninsured Motorist Coverage (UM)

With the increasing numbers of uninsured motorists, it is not impossible to get involved in an accident with UM coverage. 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.

  • Med Pay

This will cover the medical bills of all passengers regardless of who is at fault.

How to Lessen Car Insurance Rates

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 only be two words, but it has a big impact on your car insurance rates. Following safe driving practices will not only keep you safe but also lowers 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 greatly 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 made 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.
  • 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 for driving, 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 a routine car inspection and maintenance. It is important to make sure the vehicle is in good running condition. This will avoid possible car issues that may lead to a vehicular crash.

The price hike in auto insurance coverage may have a huge impact on car owner’s budgets. But car owners need to see the numerous benefits of insurance. Car owners need to see the good rather than the bad 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 that 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

Our team of insurance experts helps customers to get car protection coverage at a reasonable price. We partner with various insurance providers to provide client’s protection and financial needs. Call now and our competent agents will help you get the best car insurance coverage you need.