State Farm Drops Auto Insurance Rates in Indiana

By Mike Corbin

24 Hour News 8



The state's largest auto insurer says it's dropping its rates.



State Farm’s announcement to cut rates by 5.7 percent is music to the ears of Hoosier drivers. Insiders say the move is due to a drop in the number of claims filed statewide.



Indiana already has among the lowest car insurance rates in the nation. Lower accident rates, fewer urban areas and less traffic than other states is paying off with big savings for Indiana drivers.



"They had gotten to the point where they couldn't market in Indiana anymore because they had so many customers here. It may also be a possibility that what they've gotten to is a point where they can get back in the market, start marketing out to more people and one of those marketing tools is to do some lower rates,” said Marty Wood, Insurance Institute of Indiana.



Some drivers are pleased to hear the news. "I think it's a good idea because I'm actually getting ready to get a new quote since I have to carry extra car insurance on my car for my deliveries,” said Donna Burns, a delivery driver who thinks she’s paying too much right now.



"I think it's a good idea. I hope they all do it,” said Jerry Smith, a driver.



The company says the move will save Indiana customers $34 million a year, putting rates about 18 percent lower than eight years ago.



The move is sparking speculation about a coming auto insurance price war.



"It could be the first signs that the market is softening and that there's more competition building up in the insurance market,” said Wood. “If that would be the case, then…I think you're gonna see more companies responding to this.”



Auto body shop manager Curt Cummings says even though he's seeing fewer claims, lower rates may boost business. "Maybe that savings they have, they will in turn be able to spend the money to actually have the cars fixed, you know, if the choice is made not to fix the car, some will have that money now to do that,” he said.



Still, insiders say what goes down may go back up. They have some advice. "You still want to shop around because you can find things that are better, potentially, if you do that shopping,” said Wood.



Hoosiers pay an average $650 a year for car insurance. Nationally, it's $770.



Another thing to keep in mind: Not everyone will see their rates drop. Wood says if you're high risk, your rates may even go up to compensate for the lower rates for others.