Why Rates Change at Renewal

NJM strives to maintain the most consistent rates possible for our policyholders. Our goal is to change insurance rates slowly, and only when necessary, to avoid disrupting customers. Unfortunately, conditions outside our control, such as inflation, continue to challenge the entire auto insurance industry, and are driving our need to change rates more quickly.

What causes premiums to go up?

Claim costs have increased due to higher prices for car repairs, car parts, and medical care, which in turn has impacted the cost of car insurance premiums. In addition, rates are unique to each policyholder, so you may see changes in your premium based on factors like your driving history and the type of vehicle you drive.

NJM takes a long-term view of the economic pressures impacting the market. However, both the increased cost and volume of claims requires further rate adjustments. Some factors affecting auto insurance include the following:

• Since January 2022, the motor vehicle insurance consumer price index is up 51%*. This means that we are all spending 51% more on average than we were in 2022 on the same goods and services.

• Newer vehicles are built using more advanced technology. This increases costs because parts are more expensive and specialized labor is required to perform repairs.

• A lack of qualified auto mechanics is driving higher labor costs.

• Auto accidents have been more severe, which, when combined with increasing medical expenses, drives higher claim costs.

NJM understands that rate changes can be difficult for our policyholders. However, we must balance this with the current economic conditions and the need to uphold our financial commitment to policyholders when they experience accidents or losses.

What is NJM doing to control rates?

Part of NJM’s value proposition is to act in the sole interest of our policyholders, and we remain committed to the responsible management of your premium.

Here are some of our initiatives to mitigate the impact of increased insurance costs.

• We promote traffic safety.
  The risk of motor vehicle crashes is higher among 16- to 19-year-olds than any other age group. Through our Teen Driver Safety Program, we promote safety in the communities we serve by working with teens and parents to reduce the number and severity of accidents.

• We reduce operating costs.
  We focus on administrative improvements to maximize efficiency and minimize costs, without impacting customer service.

• We advocate on behalf of policyholders.
  When there is a new law proposed that will increase the cost of insurance for our policyholders, we educate lawmakers on how the legislation will impact consumers and offer recommended alternatives if we are able.

How can you lower your premium?

Consider some of these solutions that may help to reduce your premium while maintaining the coverage you need:

• Contact us to conduct a policy review and ensure you're getting all applicable discounts.

• Bundle your auto and homeowners policies for discounts on both.

• Raise your deductible to reduce your monthly premium. Just note that this could mean higher out-of-pocket costs if you have to file a claim.

• Consider whether you still need physical damage coverage if your car is more than five years old.

Learn more about the rising cost of auto insurance

Gibson, K. (Jan. 12, 2024). Car Insurance Premiums Around the U.S. Are Soaring. Here’s Why. CBS News. https://www.cbsnews.com/news/car-insurance-rates-inflation-costs.

Menary, J. (Nov. 20, 2023). The 4 Key Factors Contributing to Rising Insurance Rates. Insurance Journal. https://www.insurancejournal.com/magazines/mag-features/2023/11/20/748285.htm.

Nayak, V., and V. Bhat (May 29, 2024). How Car Insurance Became an Expensive Blindspot. P&C Specialist. https://www.njm.com/-/media/pdf/insurance-products/auto/rates/how-car-insurance-became-an-expensive-blindspot.pdf.