Auto Damage Claims Skyrocket: A Deep Dive into the Rising Costs and What You Can Do

The Soaring Costs of Auto Damage Claims

A recent study by the Insurance Research Council (IRC) reveals that the average payment for auto physical damage insurance claims has increased at more than double the rate of inflation from 2010 through 2018. The study, titled 'Patterns in Auto Physical Damage Insurance Claims,' found that average payments increased 3.7 percent annualized during the study period, while the overall Consumer Price Index (CPI), as well as the CPI for motor vehicle maintenance and repair, grew 1.8 percent annualized.

Impact of Technological Advancements on Claims

David Corum, CPCU, vice president of the IRC, noted that 'Damage to vehicles accounts for a growing share of the costs of paying auto insurance claims.' As vehicle technology continues to evolve, understanding the cost drivers behind auto physical damage claims will be crucial in addressing issues in auto insurance availability and affordability. The study also highlighted that total losses have become more common and more expensive, with catastrophe claims accounting for about one in five dollars paid for comprehensive claims.

Strategies for Policyholders

Given the significant differences among states and the lower rate of attorney involvement in physical damage claims compared to auto injury claims, policyholders should consider reviewing their deductibles and policy limits to ensure they are adequately protected. Additionally, with auto claims costs greatly outpacing inflation, it's important to stay informed about the latest trends and developments in auto insurance to make informed decisions.