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Making it in San Diego: New technology leads to higher car insurance rates

Safety systems make repairs more expensive
Posted at 3:00 AM, Jun 28, 2018
and last updated 2018-06-28 09:26:46-04

SAN DIEGO (KGTV) - The California Department of Insurance says rates are trending up for car and homeowners all over the state and there's an unlikely reason. The technology we now have to keep us safer is also making our lives more expensive to insure.

Cars, in particular, are prone to this phenomenon. A new car now has additional sensors, cameras, digital displays, computers, airbags, wi-fi and more. It's all designed to help people avoid crashes. But when they happen, the technology makes the repairs cost more than they once did.

One insurance agent told 10News the best example is a bumper. On an older car, a fender bender would only cost a few hundred dollars to repair or replace a bumper. Now, that same small accident can cost up to $2,000 because of damage to a rear-view camera or back-up sensors that tell how close other cars are.

The safety systems are also making it easier for people to survive major accidents. While that's a good thing, it leads to more costs for insurance companies who now have to pay more medical bills and liability coverage for lawsuits.

Due to the new technology, people are more distracted than ever when driving. While traffic fatalities are down, accidents are up, in many ways because of people using their cell phones or any other tech in the car.

Those factors have led insurance companies to ask for rate increases.

California law requires that companies ask the Department of Insurance for permission to raise rates. To do so, they must provide historical loss data to show why they need it. They also need to show projections for the next few years to justify how much they want to raise it. Many times, the request is either denied or adjusted to a smaller raise than what the company wants.

With all kinds of insurance combined, the law has saved California residents $100 billion over the last 35 years.

Still, rates are trending up, and not just for car insurance. Homeowners insurance is also rising across the state.

Technology is partly to blame for that as well. New science on wildfire predictions is allowing companies to better determine which areas are at higher risk. That means homes are now more likely to be considered riskier to insure. Since companies can't automatically raise rates, a lot of them are denying coverage to buyers.

As more land is designated "high risk" for wildfires, and more homes are built, the problem will only get worse, agents say. Right now, half of all California counties have at least 25 percent of their homes in areas deemed "high" or "very high" risk for wildfire.

Meanwhile, the wildfire season has exploded in length and intensity. It used to last for just four months. Now, wildfires are considered a threat year-round. Recent fires have been more dangerous and destructive, like the Thomas Fire in late 2017.

But insurance regulators have ways for consumers to save money on their premiums.

For homeowners, any fire deterrent or home hardening can help. Adding tempered glass windows, a fire-resistant roof and enclosed eaves can bring down your rates. So can using a product called "Barricade." It's a spray on substance, like the pink liquid dropped from planes, that acts as a fire retardant. Insurance experts say it can protect your house for days from a wildfire.

TIPS FOR INSURING YOUR HOME

First, experts say to use an insurance broker instead of looking for good rates on your own. They can search dozens of companies for the best price, while most people only look at four or five of the major companies.

Secondly, they say to shop for insurance before you buy. You may be looking at the home or car of your dreams, but the cost of insurance could put it out of your price range. Factor insurance costs into your budget before you buy to avoid surprises.

The Department of Insurance has a tool on its website to help.