Why Car Insurance Rates Are Rising

 

Why Car Insurance Rates Are Rising


NJM is committed to providing cost-effective and reliable insurance to our customers. As the cost of claims increases, we need to ensure that we are financially able to fulfill our promise to be there when you need us most. Sometimes, that means we may raise rates to maintain our financial strength.

What causes premiums to go up?

Insurance rates are unique to each policyholder, so you may see changes in your premium based on factors like your driving history and the type of vehicle you drive.

However, external factors have increasingly impacted car insurance premiums across the industry. These external factors can be summed up in two broad categories: claim frequency and claim severity.

  • Claim frequency
    Claim frequency means the number of accidents people are involved in. More people on the road, distracted driving, and severe weather events have contributed to a significant increase in the number of car accidents over the past decade.

  • Claim severity
    Claim severity means the costs that result from accidents. Since 2005, repair costs and medical expenses have both risen faster than inflation. As vehicle technology advances, the cost to repair or replace damaged parts increases.

Even if you haven't had any accidents or tickets, your premium might increase based on these external factors.

Insurance operates based on a principle of shared risk, which means that the risk of each driver is shared amongst all policyholders. In exchange for the peace of mind you gain from your NJM policy, you share your risk with every other NJM policyholder, just as they share theirs with you.

What is NJM doing to help?

NJM remains committed to the responsible management of your premium dollars. We have several initiatives to counteract the impact of industry-wide trends.

  • We promote traffic safety.
    The risk of motor vehicle crashes is higher among 16- to 19-year-olds than any other age group. Through our Teen Driver Safety Program, we promote safety in the communities we serve by working with teens and parents to reduce the number and severity of accidents.

  • We reduce operating costs.
    We focus on administrative improvements to maximize efficiency and minimize costs, without impacting customer service.

  • We're continuously improving the customer experience.
    We've implemented new tools to settle claims more efficiently and improve customer service.

How can you lower your premium?

Consider some of these solutions that may help to reduce your premium while maintaining the coverage you need:

  • Bundle your auto and homeowners policies for discounts on both.

  • Raise your deductible to reduce your monthly premium. Just note that this could mean higher out-of-pocket costs if you have to file a claim.

  • Consider whether you still need physical damage coverage if your car is more than five years old.

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