New cars with crash prevention technology and Advanced Driver Assistance Systems (ADAS) are causing auto insurance rates to rise dramatically, according to a Wall Street Journal article published April 3. The article explains that safety features such as autonomous braking, microprocessors and cameras are often located on parts of the car most prone to accidents, such as the bumper. And when these features need replacing, the cost can be five times what it would be without these features.
“It costs $166 to fix a conventional left mirror on a 2015 Mercedes-Benz ML350, according to Allstate Corp., but the repair bill balloons to $925 for that mirror with collision-avoidance technology. A tech-equipped mirror on a Lexus RX 350 is $840, more than double the $390 for a mirror without the tech,” said the article.
Additionally, the article explains that vehicle owners are not only paying more, but even drivers with more basic cars may be liable for accidents involving cars with safety features. Not only that, but in October, State Farm raised Illinois insurance rates 5.9 percent, the largest increase since 2003.
’Safer vehicles are more expensive to repair,’ the article quotes Liberty Mutual chief executive David Long as telling investors in March, and explaining why the severity of claims is increasing. “The Boston-based company, among the 10 largest car insurers, has been increasing rates by an average annual 9 percent since late last year,” said the article.
The article notes that several insurers such as Hartford Financial Services Group Inc. and Liberty Mutual, are experimenting with offering discounts to buyers who get cars with safety features. These include automatic-braking or adaptive headlights.