Car insurance rates dropped last year.

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CAR INSURANCE RATES DROPPED LAST YEAR, reversing a 20-year trend, and should continue to fall this year, according to the Insurance Information Institute. The decreases began in 1997 when State Farm, which insures roughly 25% of all U.S. drivers, reduced rates by 2%. Other insurers have followed suit, prompted not only by State Farm's move, but also by the safer cars now on the road, aging baby boomers driving more cautiously, and fewer accidents in general.

The Institute cites in particular decreasing costs, such as a 2.9% decline in the frequency of bodily injury claims from '96 to '97, and a 0.2% decline in the average size of paid bodily injury claims in 1997, as causes for the decrease in rates consumers are now enjoying. (See, also, "Auto Injuries Down, Lawsuits Up," CR, September 1996.)