In these hard economic times, amidst rising gas prices, there is a silver lining: some car insurance companies are offering cheap rates.

There are three reasons why companies are able to do so. The first of these reasons is simply that it is good for business. Car insurance is a business that reaps huge profits. Falling auto insurance premiums are an indication that these corporations are looking to increase, or at the very least maintain, these profits. Low rates are good for business.

A second reason for cheap car insurance is safety. The country as a whole is experiencing a fall in auto theft rates. A decrease in the amount of claims being filed on stolen vehicles leads to lower car insurance rates. In addition to this, vehicles are becoming increasingly safer. Airbags and antilock breaks are standard; sensors that check vehicle blind spots are becoming more prevalent; seatbelt laws are being strictly enforced throughout the country. Reduced rates of auto related accidents and injuries due to these safety measures mean fewer claims, and that leads directly to lower rates.

The third reason for cheap car insurance is the Internet. The most visible players are the increasing number of Internet-based insurance companies. These companies are entering new markets and offering low rates in order to attract new customers. As the car insurance business becomes more automated, insurance companies need to spend less on their bottom line; more customers paying their premiums online means fewer human employees needed to man phone banks. Internet-based companies have fewer costs and can offer cheap car insurance while maintaining a healthy profit margin. An additional perk that the Internet offers insurance companies is that it allows them to easily collect more data on those that they insure. With more information, insurance companies can more easily identify low-risk drivers and offer them lower premiums.

Another change that the Internet is bringing to the car insurance business is the ease with which it allows customers to shop around. The Internet lets customers get and compare many auto insurance quotes. With side-by-side quote comparison, customers can choose the auto insurance quote that works the best for them. This instant comparison also requires companies to offer cheap car insurance to stay competitive. The Internet also provides an expanded customer pool that allows insurers to target new clientele groups; they can offer lower rates to certain groups to attract new customers.

Basic business principles and increased car safety due to new technologies and stricter law enforcement efforts are certainly important roles in cheap car insurance. By and large, however, the greatest cause of this is the competitive nature of the Internet marketplace.