Why auto insurance premiums remain high despite safer cars

Published: July 26, 2019

Updated: August 1, 2019

Author: Luke Jones



Modern cars are significantly safer than older vehicles thanks to significant leaps in technology. However, motorists are not paying less for auto insurance, despite safer cars logically suggesting there should be less risk.

The problem is something insurance companies have been voicing concerns about for years. New parts and repair costs for fancy modern components are causing premiums to remain high despite improved safety.

Among those modern safety touches include collision warning systems, lane departure assistance, autonomous features, and emergency braking. Despite increased safety, vehicles are still involved in collisions and repairing them is now costly.

CBC News reports headlights are vastly different now compared to before. In the past, vehicle headlights consisted of just a bulb and a casing to protect it. Previously, fixing this component was simple, which was just as well as headlights are a frequent point on the vehicle that receives damage.

These days, headlights feature other technology, such as the ability to dim itself, moving light around corners, and in some cases LEDs. Fixing a modern headlight is expensive, on average costing $1,371 US, according to CCC Information Services.

“There’s a lot more to repairing a vehicle in a collision than there was in decades gone by,” said Peter Karageorgos, the director of consumer relations at the Insurance Bureau of Canada.

While cars are safer today, Karageorgos says crashes are just as likely to happen as more people are on the roads and distracted driving is now a factor. Indeed, collision rates in Canada continue to rise. IBC says auto insurance companies in the country shelled out over $12 billion on just over 1.2 million insurance claims in 2018.

“You may be in a safer car, that may lead to a reduction in the number of injuries or extent of injuries, and that’s a good thing,” Karageorgos said. “But we are seeing repairs and frequency going up, and the severity or cost is also going up.”