With the ever-changing and fast-growing industry of technology influencing most aspects of today’s society, it’s only natural that vehicles start becoming a bit more upgraded themselves.
Nowadays, it’s rare to find a brand new car that doesn’t come equipped with fancy features such as backup cameras, large touchscreen controls and blind-spot sensors. While these features are meant to make drivers safer, auto insurance providers are still cranking up their prices.
Newer vehicle models from the year 2016 and on are set at fairly expensive prices, which thus drives up the rate at which auto insurance companies can charge for coverage.
"If they're damaged, they're much more expensive to repair," said James Lynch, chief actuary for the Insurance Information Institute. "You can't just go to a shop and pick up a part that you can jerry-rig on."
For example, what used to be a simple repair job such as fixing a bumper, is now much more complex on entry-level luxury vehicles. A bumper repair on a high-end vehicle can cost insurers around $3,550 for a 2016 model in comparison to about $1,800 for a 2014 model, according to data from Liberty Mutual Insurance.
What makes it more expensive to repair high-tech cars are the sensors that are embedded into most of the main compartments that make up the vehicle, such as the bumpers and side mirrors, which are the spots that are more likely to be hit in accidents or fender benders.
The cost for luxury car repairs is 130 percent higher, and the cost of labor is 18 percent higher, than that of older vehicle models.
"Increasingly, simple, small repairs can now be much more costly and complex to do," said Maxime Rieman, product manager for insurance at ValuePenguin.com.
Car insurance rates are expected to rise across the country this year, according to industry insiders. From early 2012 through early 2017, the consumer price index for auto insurance increased by 25.9 percent, which was the largest five-year increase to date.
Auto insurance rates are expected to climb to $1,150 in 2018, according to the Insurance Information Institute.
Along with more expensive parts, higher insurance rates are also being caused by the higher rates of distracted driving, legalized marijuana, speeding and the amount of drivers on the roads.
"You would like to think that all this additional technology would reduce cost," said Karl Brauer, executive publisher of Cox Automotive Inc. However, he went on to explain that insurers still need to evaluate how the new technology is being used by consumers to determine their rates.
Even though collision warning systems are built to scan the road ahead and help prevent accidents, repairing such systems will still raise the severity of collision claims by about 2 percent according to senior vice president of the Highway Loss Data Institute at the Insurance Institute for Highway Safety.
"The insurance industry is very focused on the repair costs associated with these new technologies," Moore said. "When the reduction in the crash risk associated with any advanced driver assistance system is greater than the increased repair costs then insurance premiums will likely go down."