A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 15, 2021

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According to the U.S. Bureau of Labor Statistics, the average American driver spends about $1,000 annually on car insurance. Within that $1,000, there are several different types of coverage, all with different rates. But do those at different rates change frequently and, if so, how often?

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All types of insurance policies fluctuate in price depending on lots of different market conditions. Car insurance is no exception. But there are certain parts of a standard auto insurance policy that remain pretty static from one year to the next. Other portions are more subject to market volatility and move up and down with regularity. We often don’t see such quick movements because we purchase our policies six to 12 months at a time.

Liability Insurance Fairly Consistent

The one component to most auto insurance policies that stays fairly consistent is liability insurance. This type of insurance is the bare minimum in most cases and is meant to cover a driver against financial liability should he cause an accident.

For example, if you were to miss a stop sign and inadvertently hit the rear end of a vehicle passing through an intersection, you would be liable and would have to pay to repair the other person’s car, cover any damage for personal property, and even cover some of the victim’s medical expenses. Liability insurance takes care of that.

Liability insurance remains consistent for the most part, because insurance companies put limits in place.

These limits are irrespective of the type of vehicle the other person is driving, how serious his injuries may have been, and so on. These limits are also why drivers who are seriously injured in car accidents often turn around and sue those responsible for an accident. It’s the only way they can recoup some of their medical costs once insurance limits of run out.

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Collision and Comprehensive Rates Fluctuate

The real volatility in car insurance comes by way of collision and comprehensive coverage. This insurance is what pays to repair or replace your vehicle if it’s damaged.

Collision pays for damage incurred when you have an accident while driving on public roads or in a publicly accessible parking lot, cemetery, park, etc. Comprehensive coverage usually takes care of damage under most other circumstances.

The rates for comprehensive and collision tend to change fairly often due to the market value of today’s cars. It makes sense when you consider that there are typically no upward limits of this type of insurance with the possible exception of your carrier not exceeding the current Blue Book value of your car. That means insurance rates change as the cost of repairing or replacing your vehicle moves up and down with market conditions.

The Insurance Fraud Factor

It must be noted that market conditions alone are not responsible for the changes in rates for collision and comprehensive insurance. Insurance fraud is also partly to blame, especially in densely populated urban areas. For example, the Insurance Information Institute reports that drivers in New York City’s five boroughs can pay up to four times more than the state average for car insurance because of rampant fraud.

Insurance fraud can be anything from medical facilities filing inflated claims to collision shops billing for work not done to so-called “crash scams” where criminals target innocent drivers, stage a crash, and then attempt to collect on insurance payments. Where insurance fraud is rampant, it negatively impacts all drivers who are then faced with higher premiums to cover the losses among insurance companies.

Being a Diligent Consumer

Despite the fact that collision and comprehensive rates change fairly often the diligent consumer can always keep abreast of where he or she is by simply examining policy documents at every renewal. Since most of us renew on a six-month basis, it would necessitate a document review twice a year.

It only takes between 15 and 30 minutes to complete but it can yield a veritable gold mine of information that could save you money on your car insurance.

Specifically you want to look at your declarations pages to find out exactly how much coverage are getting in all of the categories you’ve chosen to carry. If you find that your policy is no longer adequate, you’re always free to assemble quotes from other insurance companies and find a better rate or policy.

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