Auto insurance premiums going up

Side view of black car

Recent data from the U.S. Bureau of Labor Statistics show that auto insurance premiums were 4% higher in February and March than they were a year ago.

The Insurance Information Institute, an industry trade group, now expects the average annual premium will reach $875 this year, up from $858 in 2008.

Why is auto insurance getting more expensive?

Commercial credit is more expensive, making it more costly for insurance companies to borrow money and manage their cash flow.

In addition, even though the frequency of auto insurance claims is going down, the dollar cost of each claim is going up.

That's because more complex, high-tech car parts are more expensive to replace, says Steven Weisbart, senior vice president and chief economist of the Insurance Information Institute.

There are several ways to soften the blow: