Car insurance rates have been on the rise, and it’s not just due to corporate greed. A recent study by LexisNexis Risk Solutions has shown that insurance claims have become significantly more severe since 2020, leading to the increase in premiums.
The study revealed that the costs of bodily injury and property damage claims have been steadily climbing. Claims for bodily injury have increased in severity by 20 percent, while material damages coverage has seen a staggering 47 percent increase. This rise can be attributed to factors such as parts and labor shortages, as well as the escalating costs of medical care.
The more severe accidents have raised concerns about whether the minimum coverage limits are sufficient to cover these higher costs. Currently, 43 states plus Washington, D.C., require $25,000 or less in coverage, with only four states mandating $30,000 minimum coverage limits. Three states have minimums of $50,000, which barely cover the average price of a new vehicle in the United States.
Total loss claims have also seen a significant increase of 29 percent since 2020, with over a quarter of collisions resulting in totaled vehicles in 2023. These claims are not only more expensive for insurers but can also be challenging for drivers in terms of customer service. According to the study, almost half of the surveyed individuals expressed dissatisfaction with their experience following a total-loss accident, with 40 percent reporting that it took a month or more to receive payment for their claim.
The severity of claims is further compounded by the fact that more people are seeking legal assistance after an accident. An overwhelming 85 percent of study respondents reported being approached by an attorney following an accident. Additionally, around 60 percent had been contacted by two or more lawyers, and more than half of those who sought legal help ended up receiving higher settlements.
In light of these findings, it is evident that the landscape of insurance claims has changed significantly in recent years. As claims continue to become more severe, it is essential for both insurers and consumers to reevaluate their coverage limits and seek appropriate legal counsel when necessary to navigate the complexities of the claims process.