Insurance FYI: Why did auto insurance rates just go up?

Tom Hess

The auto insurance bill arrives in the mailbox, and the amount you owe is higher than last time. You didn’t get ticketed for speeding. You didn’t get into an accident. You own the same car as last year. So why should you have to write a bigger check?

Insurance is one of the most highly regulated businesses in America (read about Colorado regulations at, so the fact that your bill went up isn’t sleight of hand. When insurance claims—in number and dollars—go up nationally, so do rates. That’s been true historically, and it isn’t isolated to Colorado.

One simple reason for higher rates is that, with relatively inexpensive gas, Americans have been driving more miles, and as they drive more, the likelihood to crash goes up. The Federal Highway Administration reported in February that “U.S. driving topped 3.2 trillion miles in 2016, the fifth straight year of increased mileage on public roads.” Insurance Services Office Fast Track Data for 2015 found that “accident frequency increased: bodily injury liability increased about 3 percent, and property damage liability increased 0.9 percent.”

Another reason for rate increases is that damage from auto crashes have been costlier to repair as consumers have purchased newer, more sophisticated vehicles. For example, adaptive LED headlamps, which use sensors to cast the light beam in the direction of a curve, cost more to replace than standard, non-adaptive headlamps—between 1.5 and 2.5 times more, per Certified Collateral Corp. Information Services. So even if you drive the same old car, but you hit another car, it is more likely to be a more sophisticated vehicle that costs more to repair.

Colorado weather also contributes to high rates. For example, the hail storm in Colorado Springs last July caused $352 million in damages, the fourth most expensive in Colorado history, per the Rocky Mountain Insurance Information Association (RMIIA). Damages from the May 8 hail storm in Denver this year likely will result in millions more dollars in damage claims.

Insurance may be difficult to understand, and an unpleasant reminder that bad things happen, but insurance is also a life saver, making a bad experience as painless as anyone could expect under the circumstances.

AAA connection

The best way to assure that you’re getting the right coverage at the best price is to regularly review your policy with an insurance expert. As a AAA member, you have access to an insurance expert in an office near you. Call 844-259-2803 to speak with an AAA Insurance agent, or go online at

Tom Hess is Editor of EnCompass.