The automotive landscape is rapidly changing and the credit goes to autonomous vehicles, inflation, and other such factors in equal measure. This has directly affected or changed the outlook of the motor insurance segment too. There have been many changes in the insurance norms, prices, etc.
But first, let us look at what motor insurance is before discussing its evolution.
Motor insurance is a mandate for individuals or corporations with cars and other vehicles in the US. This insurance covers you from any kind of damage that happens to you, to others, or to the car due to any unforeseeable event. Insurance should be able to cover any damage that happens while driving. This covers medical bills, damage to others’ property, etc.
Any premium of motor insurance is dependent on factors like:
- Type of vehicle
- Marital Status
- Credit score
- Driving history
- Age and gender
The number of registered drivers and cars driven across the nation is rapidly increasing. Vehicles are getting enhanced with advanced security features to prevent accidents and thefts. Even after this, the motor insurance prices have only gone up.
From simple insurance policies to completely digitized processes, the world is moving rapidly to allow for greater convenience and utility. More processes are getting automated, and features are being made available online.
To meet the growing and changing demand, even the motor insurance domain needs to evolve. Here is what the evolution of motor insurance looks like depending on various factors:
Fast track to today’s world when we are talking about self-driving cars like Waymo or Tesla. Technology is evolving at a rapid speed and new innovations emerge every day. This is sure to impact the motor insurance sector too. High-tech cars will mean more requirements for different kinds of cover leading to a surge in demand for motor insurance. However, it is interesting to note that some experts believe these autonomous cars may have the capability of driving down the insurance premium by 30%. This is because over time the risks involved are likely to reduce in this scenario.
EV cars are another thing to look out for, heralding a completely different way of looking at how the car and the individual need to be insured. These cars are built differently, and they need to be insured differently too. For instance, how is insurance to consider the status of an electric vehicle that catches fire while it is being recharged from a power source in the garage? This is likely to be an unsupervised situation, unlike when you fill gas in a traditional vehicle yourself at the gas station.
Of course, these technologies are not likely to be easily available for the masses to use immediately but the rate of change is accelerating so it’s up to insurance companies to take note.
The second thing that has a great push in the evolution of motor insurance is inflation. Motor insurance premiums have almost doubled in 20 years. Vehicles have become more expensive. Damage awards have grown in size. And the number of vehicles on the road has increased too. This has caused a sharp rise in the premiums of motor insurance.
For an individual, the premium can increase anywhere between 2-7% year after year. Apart from this, motor insurance costs can even rise if you have been part of an accident or violation.
Studies suggest that these patterns will move along at the same rate for some time. However, there will be a shift in the industry down the line as cars become safer which will reduce the premium rates to some extent.
The future of motor insurance looks quite interesting. With technologies getting more consumer-friendly and accessible, cars and car insurance could move along some unusual paths.
At Gonzalez Insurance we can help you in finding the most affordable prices and coverage combos that actually work for you. Get a customized quote or browse through our section on commercial and personal auto insurance for a better understanding.