Cost of Auto Insurance Dropped Slightly in December

RANCHO CUCAMONGA, CA, January 18, 2011 (Press-News.org) December was the only month in 2010 that showed a month-to-month decline in the price of auto insurance, according to the U.S. Bureau of Labor Statistics (BLS). The BLS's most recent Consumer Price Index (CPI) report shows that the cost of coverage dropped by 0.3 percent between November and December.

Source: http://bls.gov/cpi/

CPI data for 2010 show that the cost of a policy was on the rise for most of the year, which may push more consumers to compare prices and buy auto insurance online in order to find the best deal for coverage.

Taking the National Association of Insurance Commissioners' (NAIC) average expenditure on coverage for 2007 and factoring in subsequent price changes documented in the CPI, the average expenditure on coverage at the beginning of 2010 was around $854. After adjusting for changes reflected in the CPI, the average cost in December 2010 was around $886. That's an increase of about 3.9 percent for the year.

October and November had the largest month-to-month increases for the cost of vehicle insurance in 2010. Those months saw increases of 1.1 percent and 0.9 percent, respectively.

According to the BLS, the price fluctuations should be representative of those experienced by about 87 percent of the nation's consumers.

Although the CPI indicates that the price of a policy has been increasing, this fact does not necessarily mean that the amount spent on coverage has also been going up. In fact, the NAIC's expenditure estimates have consistently decreased in years where the CPI showed increases. This is because as prices go up, policyholders may be dropping or reducing coverage, raising deductibles or switching to more competitively priced providers. When this is done on a large scale, expenditures can decrease even when overall costs are increasing.

To learn more about comparing and purchasing policy, readers can go to http://www.onlineautoinsurance.com/buy/ where visitors will find informative resource pages and a quote-comparison generator that can jump-start the search for a quality policy.