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How Does Technology Affect Car Insurance Rates


How Does Technology Affect Car Insurance Rates

Each year it seems that auto manufacturers release brand new technologies for their cars. From advanced safety features for family peace of mind to luxury interior technologies for comfort, new car technologies have made vehicles more than just a vehicle. Today’s cars now have features in common with smartphones, high-definition televisions and smart home devices.

How do these new features and technological advances affect car insurance rates? You might think that more features, especially safety features, can lower the price of insurance. Surprisingly, many new technologies in vehicles can have the opposite effect. We’ve put together the main reasons more technology in your vehicle might cause you to face increased rates and how different factors can affect your car insurance.


The Cost of Repairing New Car Technologies

Car technology has made vehicles more complex. Many new cars feature electronic components throughout the vehicle, as opposed to the simpler features found in the past. For example, a car with a backup camera or built-in navigation center will have more electronic parts to run these features. You used to be able to take a car with a minor cosmetic issue, such as a cracked bumper, to an auto body shop or dealer for a simple fix. They would likely order a new bumper and install it fairly quickly. As cars continue to feature more complex components, this simple repair is taking more time to complete.

The increased time to fix vehicles raises labor costs for the repair. More complex parts also lead to more specialized training and knowledge for mechanics and other repairmen. Additionally, the parts themselves are increasing in price. Repairing the bumper of an entry-level luxury car from 2014 cost approximately $1,845, on average. For the 2016 model of the vehicle, the average repair for a bumper was $3,550. This cost difference is mostly due to the parts required for the 2016 model, as the newer model features a distance sensor in the bumper.

Over the past several years, car insurance rates have seen an increase nationwide. One reason for the increase in rates is new technology in cars making repairs more expensive overall. This increases the costs for insurance companies. Insurance providers then raise rates to meet the higher cost of fixing cars after accidents.


Car Safety Features and Insurance Rates

Blind spot monitoring systems, backup cameras, lane-departure warnings and adaptive cruise control are some of the most popular new safety features in cars. These technologies were developed to make drivers safer. Many drivers believe that the cost of opting for all the new safety features can be offset by lower car insurance rates. Recent research shows, however, that the discounts a driver may receive for a specific safety feature probably do not have a significant effect in lowering insurance rates.

Similar to reasons for an overall increase in insurance costs, these new safety features often contain more complex parts and cost abundantly more to repair when they break. Additionally, there is a lack of research available on the effectiveness of new safety technologies, though many experts believe the technologies do work. The drawback, however, is that human error is still a major factor in how well the safety features work. More screens, warnings and lights in vehicles may cause drivers to drive worse than before due to more distractions from the road.

It’s also important to note that many discounts available for safety-related technologies may only apply to specific portions of your premium if you opt-in for specific coverages. For example, an insurance provider might offer a small discount for installing an upgraded anti-theft system; however, the discount only applies to the Comprehensive coverage premium if you opt-in for this coverage.


Other Factors that Affect Your Rate

While car safety features and new technologies may increase the cost of insurance, the most important factors that determine insurance rates are still based on the individual driver. In addition to what type of vehicle you drive and the complexity of its technology features, your rate is greatly affected by your driving record and habits. Drivers with an increase in at-fault accidents will likely see an increase in their insurance premiums. Likewise, if a driver has a long history of moving violations, such as speeding tickets, they are probably going to pay a higher price for insurance than a driver with no at-fault accidents or violations.

A surprising factor that affects your insurance rates is where you live. A highly-populated area has more vehicles on the road than a remote rural community. More people driving on the roads leads to a higher risk of being in an accident. While no one is likely to move to a new home to lower their insurance, there are ways to get a better rate. Many insurance providers offer a range of discounts for drivers. For example, a driver with a stellar driving history may qualify for a good driver discount. Families with multiple cars can choose to purchase one auto insurance policy from one company and potentially qualify for a multi-car discount or loyalty discount. Check with your agent to see if there are any discounts you are missing on your policy.


Considering Insurance When Car Shopping

If you’re shopping for a new car remember to consider the effect the vehicle may have on your insurance rates. This includes factoring in the cost to repair new technologies that you add to your vehicle. Two cars that are the same year and model but different trim levels may change the cost to insure each vehicle.

A premium-level trim package, for example, usually includes all of the fancy features available for the car. On the other hand, a base level trim of the same vehicle might have a few standard technologies, such as a backup camera. Not only will the premium package cost more up front, but it may cost more to insure. Carefully consider which features are most important to you when choosing a new vehicle so you’re not paying more in insurance for technologies you may never use. Use our convenient online quote tool to get a free quote when looking for your new car.



Disclaimer: The above content is for informational purposes only and is not a direct representation of coverages offered by Wawanesa or its policies. The information does not refer to any specific contract of insurance and does not modify any definitions, provisions, exclusions or limitations expressly stated in any contracts of insurance. All references within the above content are illustrative and may not apply to your situation. The terms and conditions of the actual insurance policy or policies involved in a claim are determinative as to whether an accident or other loss is covered. To understand the coverage under your current policy, please log into the account management platform to review your policy or contact an agent directly.

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