Car Insurance Rates Predicted to Go Down in 2007 - But Only for Savvy Shoppers

For years, car insurance rates have gone up every year, and their rise has even outpaced inflation. Since car insurance pays for bodily injury damages, rapid increases in the cost of health care have directly contributed to the rising cost of car insurance. But finally, after many years of going higher, car insurance rates are predicted to be on the decline in 2007. The question is: Are you prepared to save?

Why Are Car Insurance Rates on the Decline?

Why are car insurance rates on the decline? A lot of people might be thinking, "Who cares!" But an understanding of why car insurance rates are going down can help you know what to do to make sure your rates go down. After all, just sitting there and doing nothing is unlikely to result in any savings.

For one, there are fewer accidents. Since car insurance spreads risk among a pool of "insureds," this means that safe drivers end up subsidizing more accident-prone ones. Sure, reckless drivers pay higher rates, but they can't possibly cover 100 percent of their own claims. Therefore, fewer accidents overall results in lower car insurance rates even for people who've never been in an accident. Of course, with fewer accidents, this means that car insurance companies are more easily able to pinpoint blame, so motorists with poor driving records will probably see a slight increase in their car insurance rates in '07, not a decrease.

Robert Hartwig, chief economist of the Insurance Information Institute, believes that one reason there are fewer accidents is that the Baby Boomer generation has entered its safest driving years. Another is that cars are getting safer, and as time goes by, older, more dangerous cars are being replaced by newer, safer models. Again, if you drive a particularly dangerous car, don't expect the same savings as someone who has been driving a safe model for years.

Finally, many motorists have made fewer claims because they've taken out higher deductibles. Think about the compounding nature of these three factors: The driving population is getting safer, their cars are getting safer, and a lower percentage of the fewer accidents that do take place are reported to insurance companies. It takes a perfect storm like this to stem the rising tide of health care costs!

So How Do I Save on My Car Insurance?

For one, you can emulate the profile described here: Be a Baby Boomer, drive a safe car, and carry a high deductible. Of course, you can't do anything about your age (but get older… with time), and having a high deductible may not be right for you, but you can still save on your car insurance.

Remember, car insurance pools risk. Overall car insurance rates are on the decline because overall claims are falling. Assuming you don't have a terrible driving record or some other factor that makes insurance companies consider you "high risk," you should be able to save on your car insurance in 2007 - but only if you try. Your insurance agent is unlikely to call you up and say, "Good news! I'm cutting your rates!" You have to shop around to save. Luckily, with the internet (and carinsurancerates.com, in particular), it's never been easier to find the best deals.