Most people get excited when gas prices go down and for good reason! Summer road trips, vacations to visit family and friends, and more trips to beach all become more affordable when gas prices drop.
However, lower gas prices also mean more people traveling and busier roads. This can often lead to higher auto insurance rates. Here’s why and what you can do about it.
July Already a Problem Month
According to the 2018 Rhode Island Highway Safety Plan, July is the second worst month for highway fatalities (14%) in our state. With more visitors, more speeders, and more impaired drivers, the risk of accidents and injuries increases, but even more so when gas prices drop.
More Miles – Higher Risk
The lower price for a gallon of gas not only means more people driving – it also means people drive farther and more often.
During the warm summer months, people are more likely to take long road trips to visit friends and family or to visit faraway places when they can buy more gas with their dollar. They also do so more often since the cold weather comes around quickly and people want to pack in as much fun as possible before the weather turns.
Seasonal Vehicles & Drivers
Low gas prices and warm temperatures mean it is time to pull out the RV, boat, motorcycle, and other seasonal vehicles. Often times, these vehicles can increase travel risk, especially when drivers only operate or tow these machines occasionally.
Slow moving RVs, people pulling trailers, and hard-to-see motorcycles increase your risk.
More Accidents – Higher Premiums
Insurance companies assess risk to determine premiums. When drivers travel more it leads to more accidents, and more claims. Consequently, insurance companies often raise premiums to recover lost revenues.
It is unclear whether all drivers will pay more. More likely, insurers will probably target increases based on driving records and the number of miles you rack up while gas prices stay low. Luckily, there are a few things you can do to minimize the impact if insurance companies decide to increase premiums across the board.
Manage Your Premiums
Undoubtedly, the first thing you should do is talk to your local insurance agent. Review your existing coverage to ensure you’re getting the discounts you deserve and to eliminate any unnecessary coverage. For instance, life changes such as working at a new job closer to home could lead to lower premiums.
Your agent may also be able to bundle your homeowners or renters insurance policy with your auto insurance for a lower premium.
Finally, if you do not think you’ll drive a great deal even though gas prices have dropped, you may want to consider telematics. When you install a telematics device in your vehicle it tracks your mileage and driving habits. Insurers often offer a discount to drivers that don’t drive much.
If you haven’t reviewed your insurance coverage lately, it’s a good idea to do so now. Your agent can help you understand better ways to save and prevent premium hikes. They’re industry professionals with the expertise you need, and they work for you – not the insurance companies.