Crash avoidance systems are saving consumers money even as they also contribute to higher average repair costs
Arlington, Va.—According to the U.S. Bureau of Labor Statistics, the average price of vehicle repairs has risen more than 40% since 2020 , which has been faster than the rate of inflation.
However, the number doesn’t capture repairs that were avoided because vehicles didn’t crash, states the Insurance Institute for Highway Safety (IIHS) and the Highway Loss Data Institute (HLDI) in a new report.
Crash avoidance systems are saving consumers money even as they also contribute to higher average repair costs: though they’re expensive to fix, they’re effective at preventing crashes.
The sensors used for automatic emergency braking, blind spot detection and other crash avoidance systems are often blamed for high repair costs, but there are many other causes, states IIHS/HLDI.
• Components like headlights have become more sophisticated.
• SUVs and pickups, rather than hatchbacks and sedans, dominate the market.
• Ordinary cars now come with features that were once reserved for luxury models.
• Nearly two-thirds of new vehicles now have all-wheel or four-wheel drive, and more than half have turbocharged or hybrid engines or are fully electric.
All contribute to higher repair costs. As the analysis notes, larger vehicles generate more energy when they crash, resulting in more severe damage; more nice-to-have technology, such as power seats or an elaborate entertainment system, costs more to repair than the old basics; and advanced powertrains sometimes have more components to fail and require specialized repair.
The role of advanced driver assistance systems (ADAS)
If a model equipped with automatic emergency braking (AEB), lane departure warning and blind spot warning and an identical model without those features both get into the same kind of front-to-rear crash, the equipped vehicle will be more costly to repair. Sensors can be expensive and often require calibration after replacement.
On balance, however, those systems are saving drivers money, states IIHS/HLDI. To understand how, the report examined specific metrics used by the insurance industry as noted below:
Claim severity, which represents the dollar amount needed to settle a claim, is a good proxy for repair costs. Claim frequency, or how often claims get filed, is important for a different reason: It gives you a way to price in those repairs that never happened because you didn’t get in a crash. Overall losses are calculated by multiplying claim frequency by claim severity.
Under collision coverage, which pays for damage to the insured vehicle after a crash, claim severity numbers do show that repair costs are higher for vehicles with crash avoidance sensors. In one HLDI comparison of otherwise identical 2017-22 model year vehicles with and without a bundle of driver assistance features, collision claim severity was about 10% higher for the equipped vehicles.
However, what happens with claims under property damage liability (PDL) coverage, which pays for damage to the vehicle hit by the policyholder, suggests that something else is going on, IIHS/HLDI says.
“PDL claim severity is also higher for the crash-avoidance-equipped vehicles — by an even larger 15%. Unless having crash avoidance features magically makes you more likely to hit other cars with crash avoidance features, there’s no way that’s related to the cost of sensor repairs. What’s happening isn’t magic; it’s math.”
ADAS prevents many of the low-speed fender benders that make up the bulk of claims under both collision and PDL coverage. The greater proportion of higher-speed crashes left over pushes up the average claim severity.
The same study of 2017-22 models showed that claim frequency was lower for the equipped vehicles — about 10% lower for collision claims and almost 40% lower for PDL claims. As a result, overall losses, or the total amount it costs insurers to pay for all the claims in a given year, were about 5% lower for collision coverage and almost 30% lower for PDL coverage for the vehicles loaded with crash avoidance features.
As the analysis states, “That doesn’t just mean crash avoidance systems save insurance companies money; it means that, on average, drivers of equipped vehicles come out ahead too. After all, every crash avoided is a deductible you don’t need to pay.”
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