Vehicle manufacturers are constantly testing new technology to reduce accidents and protect passengers from injury. Over the last decade, we have seen many enhancements including the latest collision avoidance systems. While these safety measures are extremely important for drivers and passengers, they also have an impact on the cost to insure a vehicle.
For example, radar, laser and camera-based systems are now offered by most vehicle manufacturers, not just high end and luxury vehicles. Typically, cameras and sensors are placed in the front and rear bumpers, and radar systems are placed in the front grilles. As you can imagine, both of these areas are prone to—expensive—collision damage.
Mitchell International, a company that provides collision estimating data, analyzed 15 different vehicles to illustrate the increased cost of repairs. When Mitchell compared these vehicles’ prior generation to their latest generation, the results showed a 23% increase in repair costs. The depictions below illustrate the costs associated with parts on a 2015 Jeep Grand Cherokee. On just the front bumper alone, the total number of parts increased from 19 in 2010 to 42 in 2015.
Another area driving up costs are new headlight assemblies, which are the second most commonly replaced part. The most common headlamp used in the past consisted of halogen bulbs with an average cost of $272. Today’s vehicles are moving to a LED headlamp, increasing the average cost to over $1,400. BMW and other auto manufacturers are enhancing their headlamps to include adaptive LED lamps, which react to the steering of the car. Average price? A steep $4,316.
Despite the changing landscape in repair costs, the ultimate goal is increased safety, which is proving to be evident. The Insurance Institute for Highway Safety research shows a decrease in accident frequency on vehicles equipped with these enhanced systems (see the chart below). Also as a result, our underwriting and actuarial departments are factoring in increased repair costs when accurately pricing our automobile policies and implementing rate increases.