Napoli Bern Ripka, LLP Blog

Less Driving Means, Fewer Accidents: Benefits go to the Auto Insurer

With less people driving on the road, accidents are going to occur less frequently. Due to the increasing rise in cost of gas, a toll is being taken on the U.S. economy. However, auto insurance companies are the ones who are reaping the rewards. Less people driving on the roads will cause fewer accidents; therefore boosting auto insurance earnings.

The U.S. Department of Transportation reported that vehicle travel mileage dropped by 4.3% in March compared to the year-ago month, and that March marks the first 12-month period in which the total number of miles driven dropped from the previous 12-month period since the agency started keeping the records in 1983. This increase in gas price is a good sign for auto insurers because they will no longer have to cut their rates, like they have done in the past, in order to gain new business. These insurance businesses are also relating to consumers by offering new programs such as “drive less, pay less” to reward them for their less risky driving habits.

This connection between driving less and fewer accidents makes sense, which would cause the frequency of accidents in the present and future to decline. Even if drivers get into fewer accidents, the benefit could be partially outweighed if the cost of repairing vehicles rises due to higher material costs, Allstate spokesman Rich Halberg pointed out. Lehman Brothers analyst Jay Gelb says higher gasoline prices adding 30 cents to his 2008 per-share earnings estimate for Allstate, and 15 cents to Progressive’s. “We are not making a call today on the sustainability of high gas prices, but we believe this trend will be strong enough at least in the near term to result in a return to favorable loss frequency trends for auto insurers,” Gelb wrote.

A similar gas increase occurred in the 1970’s where there was a decrease in driving and thus a drop in accidents. However, as soon as the increase dissolved, people began to drive again and thus more accidents occurred. We will not know how our economy is going to respond to our oil situation; however we can see the pattern with gas, driving and accidents. Auto accidents are inevitable and if you have been suffered a personal injury or loss or damage as either a driver or passenger in a car accident, you may be entitled to compensation at law for the consequences of the accident. Don’t waste time and get a skilled auto accident lawyer that can guide you through every step of the way of the legal process. An injury lawyer has the power and knowledge to deal with insurance companies refuting complicated claims that can leave you at a loss. Napoli Bern Ripka, LLP are experts in New York, New Jersey, and Pennsylvania state laws that are able to help you to understand the value of your car accident case and explain how to proceed in obtaining justice