Online Auto Insurance Quantifies How Increases in Coverage Can Affect Price

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OnlineAutoInsurance.com has put numbers to the commonly known fact that increased coverage often leads to increased costs. The site ran the numbers for seven California insurers and five coverage scenarios and has published the results.

Prices for different auto insurance coverage scenarios (chart)

If you want to have a bigger TV, you’re going to have to pay more. If you want a nicer car, it’s likely that you’re going to have to pay more. And if you want broader coverage from your auto insurance provider, you’re also probably going to have to pay a little extra. But just how much of a price jump can you expect to come with increased financial protection for your car?

To answer that question, OnlineAutoInsurance.com ran the numbers for five different coverage scenarios across seven different California insurers in order to compare auto insurance prices at different levels of financial protection. They found that, in many cases, drastic jumps in the levels of liability coverage often brought relatively minimal increases in the price of a policy. (See chart attached to original PR Web release to view statistics for each company and liability level.)

In California, drivers are required to carry only 15/30/5 liability protection. (Those numbers mean that each motorist must have a policy that will pay for up to $15,000 in bodily injury damages per person caused by the policyholder and up to $30,000 total per accident, as well as up to $5,000 in property damages caused by the policyholder.)

Source: http://insurance.ca.gov/

Those minimum levels are not much higher than average claim sizes and are much lower than what many in the industry recommend having. The Insurance Information institute, for instance, has said the general recommendation is to have $100,000 in bodily injury liability protection per person and $300,000 per accident.

And it turns out that these levels may not be out of reach for most drivers. OnlineAutoInsurance.com found in its analysis that raising limits on a policy from 15/30/5 up to 100/300/50 would be increasing total liability coverage by 900 percent but would bring an average premium increase of only 21 percent.

Here are a few other highlights from the analysis:

  •     Some double-digit percent increases in total amounts of liability coverage brought with them, on average, only single digit increases in price
  •     Increasing total liability coverage by nearly 16 times (by going from scenario 15/30/5 to 250/500/50) brought with it an average premium increase of only 27 percent
  •     In the case of one insurer, increasing limits above the 50/100/25 level brought with it no increase in premiums
  •     Price variations between providers were so large that, in one scenario a drive could save nearly 50 percent just by switching companies

To read about this and other car insurance issues, readers can go to http://www.onlineautoinsurance.com/compare/ where visitors will find informative resource pages as well as a quote-comparison generator that can help consumers find the best rates for a policy.

Note on methodology: All rates were generated for a single driver profile — an unmarried 30-year-old female who lives in the 90039 ZIP code in Los Angeles, has a clean driving record and drives a 2009 Toyota Corolla LE an average of 12,000 miles per year. All coverage scenarios included comprehensive and collision coverage with $500 deductibles

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Benjamin Zitney
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