NEW YORK, May 3 (Reuters) - The cost of U.S. auto insurance is expected to rise by just half a percentage point in 2006, the smallest increase in six years, according to the Insurance Information Institute.
The average cost for auto insurance nationwide for 2006 is estimated at $867, an increase of just $4 per vehicle from last year, according to the III, a New York-based group sponsored by the property and casualty insurance industry. The increase represents a continued slowdown from 2005 when auto insurance costs rose by 2.5 percent.
"The cost of auto insurance is increasing by about one-sixth the rate of inflation and little more than a single gallon of gasoline," said Robert Hartwig, chief economist of the III. "Many people who have excellent safety records may see their rates go down, often by $25 to $50 per vehicle."
People who trade in gas-guzzling sport utility vehicles for smaller, more fuel efficient and less expensive cars may see even lower insurance costs in many cases, III said. Smaller cars that cost less are often less expensive to insure because of reduced repair costs.
Some insurers now even offer special discounts for hybrid vehicles, which run on a combination of gas and electricity. It may also pay to just leave the car at home, III said.
"People who make the switch to public transportation may also qualify for lower insurance premiums if they no longer use the vehicle commuting and drive it significantly fewer miles each year," Hartwig said.
Insurers have also cited the declining number of auto accidents, safer cars, new auto theft technology and fraud-fighting efforts as additional factors contributing to the cost slowdown.
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