It’s common sense that the less time you spend on the road, the less your chances of getting in an accident and placing that call to the insurance company. With gas prices finally leading to a drop in the number of miles traveled by Americans, car insurance companies are reaping the rewards.
For instance, when overall vehicle mileage dropped by 4.3% in March compared to a year ago, auto insurers saw both reduced accidents and reduced claims. The industry loves this news, especially after the past few years it’s spent cutting rates to stay competitive.
Just as soon as you see a silver lining on the cloud, however, you realize the thunderstorm is still on its way: Insurers are also expecting to see repair costs go up as the cost of raw materials continues to climb. This means that the claims insurance companies field will become more expensive, even if there are fewer of them to cover.
Another unpleasant long-term possibility is that if gas prices continue to rise, Americans may look to alternative methods of transportation and buy fewer cars. Unfortunately for the industry, a bicycle or bus pass does not need to be insured.
Who Benefits from Higher Gas Prices? Auto Insurers. (Wall Street Journal)
