A multitude of factors have influenced the automotive industry over its history. The growth of the oil companies, an expanding middle class, assembly line innovations and foreign competition have all had an impact on auto manufacturing. Another factor has been the role of car insurance. With almost every state mandating a minimum of liability insurance for all drivers, the insurance companies have a vested interest in the safest possible cars being on the road.
While auto manufacturers may not intentionally ignore safety in its design of cars and trucks, it often has to be balanced against consumer demand and the cost of production. Auto manufacturers will not be in business for very long if they fail to produce affordable vehicles that people want to buy. Car insurance companies, however, can send the necessary signals to the auto manufacturers when vehicles begin to pose an unacceptable risk of being in an accident or being stolen.
When car insurance for a particular type of vehicle becomes too expensive, the auto industry must eventually take action to correct the safety issues. Often, this results in safety innovations that become industry standards, such as seat belts and air bags. If the automotive industry is too slow in taking corrective action, car insurance companies will often lead the political fight for legislation requiring specific safety equipment in new vehicles. For instance, seat belts were not standard in all cars and trucks until states began to enact mandatory seat belt laws.
The trend lines are familiar: At first, a safety feature is not included in the manufacturing of new vehicles. Then, the number of accidents begins to rise, and the cost of car insurance increases. Finally, the automobile industry gets the message and starts offering the safety feature as an option, or eventually as standard equipment.
Similar to safety concerns, stolen vehicles also pose a risk to car insurance companies. Car alarms, tracking devices, and other types of theft prevention technology have expanded as options for consumers because of the influence of the insurance companies. Cars that are less likely to be lost due to theft help to keep the cost of insurance down, benefiting both the insurers and the consumers.
Another impact that car insurance has had on the automotive industry is the manufacturer recall. When a serious safety issue arises, manufacturers routinely recall the affected vehicles for immediate repairs. Such a fast response to a manufacturing defect is in direct response to the pressure from the insurance companies, as well as concerns over costly class action suits.
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