Advanced Vehicle Technologies and Insurance Costs

With the advent of increasingly expensive new vehicle technologies, collision repair shops are asking what kind of repairs might be considered good enough. For insurance companies, the question is when a vehicle should be written off because of cost consideration. With the advent of Advanced Vehicle Technologies (AVT), some vehicles that are still roadworthy may instead become writeoffs because of their high AVT content. Examples of AVT include using of high strength steels in vehicle structures, aluminum chassis, carbon fibre cells and body parts, advanced welding and bonding techniques, electric vehicles and hybrids and electronic safety features and driver aids.

The impetus for using AVTs is pretty simple – reduce fuel consumption and increase combustion efficiency, which in turn reduces exhaust emissions. To this end, manufacturers have sought to improve vehicle efficiency by using materials substitution, downsizing existing vehicle designs, systems or components as well as using new structural, systems or component designs. They have also adopted alternate materials in conjunction with these new designs. Other manufacturers have also improved efficiency of engine accessories by converting some systems like the water pumps and power steering systems to electricity-driven designs. All these add up to additional costs for the consumer, the collision repair shop and the car insurance company. This is when the question of what car insurance companies should pay for in terms of repair crops up. As the repair costs add up across the board, it will only be natural for insurance companies to increase premiums. While increased insurance premiums may not affect owners of expensive luxury or sports cars too much, imagine the impact this will have on lower-income car owners who struggle to make monthly payments. Bolstering this statement is the fact that technologies that only BMW or Mercedes employed half a decade ago have now found their way in entry-level cars like the Ford Focus. As an insurance industry expert has put it, “Advances in technology drive costs. We’re talking about the increasing complexity, the equipment required to make the collision repair and the training that’s necessary to make the repair successfully and correctly.”

This can change how commuters use their cars, such as reducing car use or giving up on certain kinds of trips altogether. With less use of cars, even collision repair shops will feel the pinch when less accidents result on average. One only has to look into collision repair data in mild winters to see what we’re talking about.