Nearly everyone knows all about the high gas prices we have all been experiencing and the negative effects that they have had on paychecks, travel plans, and family budgets.
The rising cost of fuel has caused the prices for a lot of other items, especially food items, to raise in price as well.
This has put a lot of stress on Americans bank accounts.
The auto insurance industry, however, may actually begin to see prices for policies going down in the near future.
As long as gas prices are still high, people will be traveling fewer miles to save money, and riding public transportation and car pooling.
Let's take a look at how this can be possible.
More and more people are looking for alternative means of transportation in the wake of the expensive prices of gasoline.
Public transit has seen increases in use, co-workers are now carpooling to get to work, and vacations are being cancelled or combined with other trips in order to drive fewer miles which in turn uses fewer gallons of gas.
With people driving fewer miles per trip, or not driving altogether by relying on public transportation or carpooling, there are less vehicles on the road.
By making the assumption that less cars on the roads would lead to less accidents, which seems reasonable to think, then that would in turn mean fewer claims are being filed to insurance companies which would allow for lower rates.
This line of thinking is precisely what leads to lower auto insurance rates.
Because people are riding the bus to work instead of driving, or taking a tour bus to their vacation destination with several other families as opposed to driving there alone, less accidents are going to happen.
The more cars on the road, the more accidents that will occur.
After all, the road is going to remain the same size regardless of how many cars are on it.
Fewer accidents leads to fewer injuries which means your insurance company is not having to pay out as much money for injury payments.
This primary factor allows the auto insurance companies to lower rates.
Lower rates for low mileage drivers is nothing new; companies have been giving discounts for driving under a set amount of miles for years, it's just that now with gas being so expensive, more and more drivers will fall into the "low mileage driver" category simply because they cannot afford to drive as much as before.
Now before you get too excited about this drop in insurance rates, don't expect to be saving a lot of money in the long run.
If you look at your car payment, insurance payment, and gasoline bill as one big "car expense," the drop in insurance rate will most likely be outweighed by the steep rise of your gasoline bill and the savings will be gone as soon as you fill up your next tank.