Average Cost of Coverage Posts Small Increase in January

Jan 2011 CPI Chart

Click graph to enlarge

The average price of an auto insurance policy posted a slight uptick in January, according to the Bureau of Labor Statistics’ (BLS) most recent Consumer Price Index (CPI) report.

According to the BLS, the cost of a policy inched up 0.2 percent between December and January.

Although the new report shows that policy prices rose a bit, they had dropped 0.3 percent between November and December, and January’s increase was much smaller than the increases seen in the November and October CPI reports.

The average premium for a policy that included liability, comprehensive and collision coverage in 2008–the most recent year for which data is available–was estimated to be $902. Taking into account subsequent CPI reports, that same policy would be about $985 today. That represents an increase in price of 9.2 percent.

But even though the CPI is showing a 9.2 percent premium increase between 2008 and January 2011, this doesn’t necessarily mean the average consumer is paying 9.2 percent more than they were in 2008. That’s because consumers can offset price increases by taking measures such as lowering coverage levels, raising deductibles or qualifying for new discounts.

About the Motor Vehicle Insurance Consumer Price Index

Every month, the BLS publishes an update of its CPI, which is meant to track and give data on the price changes of consumer goods in America over time. The CPI data referenced by Online Auto Insurance News are representative of changes in the cost of coverage for an estimated 87 percent of the U.S. population.

The BLS collects its motor vehicle insurance data from a sample of insurers from each of the 87 pricing areas used in the CPI. Prices of coverage are ascertained by looking at a sample of 768 individual private passenger policies or quotes. The CPI actually tracks the prices of these policies over time, and price changes due to fluctuations in insurer premium-calculation formulas are reflected in the CPI data, as are changes caused by increases in state-mandated minimums for automobile insurance coverage.

According to the BLS, “The major types of coverage included are collision, comprehensive, bodily injury liability, property damage liability, medical payments, uninsured motorist and personal injury protection.”

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

No comments yet.

Comment on this article