Factors Impacting Your Current Auto Insurance Premium
It’s a common experience for every driver – seeing your auto insurance premiums rise, even after a year of good driving. You may have thought about shopping around, but often it remains just a thought. You’re not alone.
So, why do auto insurance rates keep climbing despite your clean driving record? Factors beyond your control often come into play. Let’s explore the primary reasons your auto insurance premiums may increase and what you can potentially do about it.
Factors Driving Auto Insurance Rate Increases That Are Beyond Your Control
Car insurance rates can increase across the board due to several factors:
- Increased accidents: If your area experiences a surge in accidents, the liability for every insurance company goes up. This can result in higher rates for all drivers, not just you. Insurers need to protect themselves in case you are involved in one of these more frequent accidents.
- Rising repair costs: As the cost of materials and labor for car repairs increases, insurance companies adjust their premiums to cover these expenses. If it costs more to repair vehicles, it means higher premiums for policyholders.
- More drivers on the road: With the ongoing improvement in the economy, more people are buying cars and driving more. This heightened activity elevates the risk of accidents for everyone. To mitigate this risk, insurance companies raise premiums across the board.
- Unusual weather: If your area experiences atypical weather conditions such as floods, hurricanes, or hail, insurance rates may rise. Increased weather-related claims prompt insurers to offset these expenses by raising premiums for all policyholders, not just those directly affected.
- Higher speed limits: If the local authorities recently increased speed limits in your area, it could lead to a higher risk of accidents. As a result, insurance companies often raise premiums to safeguard against this heightened risk.
Factors Contributing to Individual Auto Insurance Rate Increases
Your own actions can lead to increases in your car insurance rates, affecting only your premiums, not those of others:
- Accidents or claims: Having an accident or making a claim, even if it wasn’t your fault, can mark you as a risk for the insurance company. Consequently, your premiums may increase to account for the risk of it happening again.
- Poor driving choices: Offenses like DUI or reckless driving pose a significant risk to insurance companies. The potential consequences of these choices are substantial, prompting insurers to raise premiums to compensate for the risk you represent.
- Adding a driver: Any time you add a driver to your insurance policy, especially a teenage driver, it alters the policy’s dynamics. Teenagers can substantially increase your premiums due to the higher risk they pose.
- Relocating: Changing your place of residence can result in an insurance rate increase. Insurers determine premiums based on the risk associated with the area. Moving from a safe location to a high-crime area, for instance, may lead to higher premiums.
Other Potential Reasons for Insurance Rate Increases
Sometimes, insurance rates increase for less obvious reasons:
- Losing bundled rates: If you previously bundled your home and auto insurance with the same agent but then separate them, you might lose the associated discount.
- Purchasing a new car: Prior to buying a new vehicle, it’s advisable to inquire about the insurance rate for that model. Insurers determine premiums based on factors like the car’s safety record, susceptibility to theft, and repair costs. Choosing a vehicle that’s expensive to insure could lead to significantly higher premiums.
At times, insurance companies implement across-the-board rate increases. To navigate these situations, shopping around is recommended. We suggest reviewing your car insurance at least annually to ensure you’re receiving the best deal. Sticking with the same insurer might work against you, as they may not have an incentive to offer discounts. When you shop around, competing companies may be more motivated to retain your business, potentially leading to better rates.