American car insurance rates are going up up up. In the last decade, they climbed 29.6 percent to an average of $1,548 in 2019 from $1,194 in 2011. The surge, detailed in a new report from insurance shopping site The Zebra, outpaced both inflation (by far) and the increase in average car prices (more narrowly). And it came even as the rate of crashes has fallen year over year.
Aggrieved drivers have plenty of directions to point their fingers. Vehicle theft is on the rise, and extreme weather fueled by climate change can destroy swaths of vehicles in short order. Hurricane Harvey wrecked up to 1 million cars in the Houston area in 2017. And while crash rates have dropped, they’ve been buoyed by increasing urbanization and a strong economy, which put more drivers—many of them distracted by smartphones—in tighter spaces.
A more surprising, counterintuitive culprit isn’t the wider world or the person behind the wheel, but the car itself. It turns out that new features designed to keep vehicles in their lanes and out of trouble are contributing to rising insurance rates.
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That’s because the sensors that power those systems make cars much more expensive to fix when they do crash. Dent a steel bumper, and a few hammer blows gets you back on the road. Smash one on a new car, and it could mean replacing a radar, camera, and ultrasonic sensors, then calibrating them so they work properly. Replacing a cracked windshield now comes with the extra cost of having someone readjust any cameras that look through the glass. “Technology is playing a bigger role than ever in pricing,” says Nicole Beck, The Zebra’s communications chief. “It’s not actually making it cheaper for people.”
While some studies have shown the effectiveness of emergency braking, insurance companies haven’t yet seen enough evidence to justify a break in rates for most of these features. That’s not to say lane keeping, parking assist, and the rest don’t work. They’re all relatively new, and the actuaries aren’t yet confident that their benefits outweigh the extra costs they incur to repair. Complicating the picture is the fact that each automaker offers its own version of each feature, and that drivers may not keep the systems engaged.
“A lot of the developments so far have mixed results,” says Tom Karol, general counsel for the National Association of Mutual Insurance Companies. “It’s not really been proven out yet, in terms of benefits.” Which is why, according to the report, drivers who go for electronic stability control, which keeps cars from spinning out of control, save just $8 a year. Those who pay for blind spot warning, driver alertness monitoring, lane departure warning, night vision, or parking assistance systems save nothing at all.
Still, at least one company sees the upside of sensor-driven driver assistance. “They absolutely lower the frequency of crashes,” says Alex Carges, the chief actuary at The Root, an insurance startup that determines rates based on how people drive, using accelerometer and GPS data from their phones.
