A question I get often, “Why did my auto insurance go up?” There are many possible answers to this question, but I will speak on one of them. A portion of your auto insurance is coverage for liability. It pays for medical expenses if you are involved in an AT FAULT accident, or if you are LIABLE. Your policy will pay for the medical expenses for anyone you injured. We all know what the cost of medical expenses have gone up exponentially over the past 10 years. Why do you think health insurance rates have gone up almost 20% per year over the past 5 years? According the Insurance Information Institute, the average liability payout in 2003 was $11,135. In 2012 it was $14,653. It is an increase of $3,518 per claim or 32%. http://www.iii.org/facts_statistics/auto-insurance.html It is easy to see and understand that the cost to pay for those claims need to come from somewhere. Insurance is shared risk. We all pay a little to protect us financially when something goes wrong. Your insurance premiums give you access to $100’s of thousands or even Millions of dollars when you need them. The insurance companies have money set aside to pay for claims. As the cost of those claims increase, they have to make sure that they have enough in these reserves to continue to pay those claims. A rate increase is one way to do that.