Commercial auto insurance premiums often increase due to a combination of economic, industry-wide, and individual business factors. Here’s a breakdown of the main reasons insurers raise rates:
1. Rising Repair and Replacement Costs
- Vehicle parts and labor costs have surged in recent years due to inflation, supply chain issues, and advanced vehicle technology (sensors, cameras, etc.).
- Even minor collisions are now more expensive to fix.
2. Increased Claim Severity
- The average cost per claim (especially for bodily injury and property damage) has risen sharply.
- Medical costs, litigation expenses, and large settlements have grown.
- Nuclear verdicts (jury awards over $10 million) in commercial cases have become more common.
3. Higher Accident Frequency
- More vehicles on the road, distracted driving (texting, GPS use), and fatigue-related crashes all contribute to more accidents.
- Commercial fleets and delivery vehicles—especially post-pandemic—are driving longer hours and distances, increasing exposure.
4. Inflation and Economic Pressures
- General inflation affects everything from vehicle prices to medical bills to administrative costs.
- Insurers pass these increases on through higher premiums.
5. Business-Specific Factors
Your own business’s rates can increase due to:
- Claims history: Recent or frequent accidents or large claims.
- Vehicle types and use: Heavier vehicles, high-mileage routes, or hazardous materials raise risk.
- Driver records: Violations, inexperience, or high turnover among drivers.
- Location: High-traffic or high-theft areas raise premiums.
- Fleet growth or usage changes: Adding more vehicles or expanding service areas increases exposure.
6. Reinsurance and Industry Losses
- Insurance companies buy reinsurance (insurance for insurers). When reinsurance costs go up—due to large national losses or global market pressures—those costs are passed down to policyholders.
Professional Underwriters, Inc. is an independent agency that has access to multiple auto carriers. Please contact us for a quote today! You can reach out to us here. You can also call us at 248-553-8300. We are available to provide you a quick quote.