Why Is My Insurance Rate Increasing?
It can be very frustrating when you notice your auto insurance rate is higher than it used to be. Adding to the frustration, there won't be any fine print explaining exactly why your provider is charging you more. The price of insurance and how your provider determines what you pay are private matters auto insurance companies aren't very open about sharing.
Figuring out what went wrong is a guessing game of sorts, though you can safely assume circumstances that present higher risk mean higher auto insurance rates. Here are some possible reasons why your insurance rate keeps going up.
Your Financial Standing
One of the risks auto insurers look out for is whether you might let your coverage lapse. If your finances are substandard, you might be considered a risk.
There's a statistical correlation between your credit score and how likely you are to file a claim. If insurers see that you have a low score, it could drive up your monthly premiums.
Your Driving Habits
If you've recently been involved in a car accident, your insurer may interpret the incident as a sign that you are a risky driver and raise your premium accordingly.
Citations, DUIs, and moving violations on your record can also have this effect. Insurance providers look at the severity AND frequency of your traffic violations and collisions to factor this risk into the cost of your car insurance.
Where You Live or Work
If you've moved into a new neighborhood that isn't as safe as your old one OR if crime has suddenly gone up in your neighborhood your car insurance premiums may increase.
In addition, your insurance company knows where you work and where you live, so they can calculate the distance between the two. A longer commute means more driving and therefore more chances for vehicle damage and accidents. Also, if you work at a job/organization that makes you eligible for certain car insurance discounts, leaving that occupation could raise your rates.
Your area may have also become the victim of a higher rate of natural disaster. If hazards such as flooding, sinkholes and hurricanes begin to significantly affect your area of residence, the insurance company may charge you more. Road conditions and changing weather patterns raise the risk of incident, and can trigger higher premiums.
Your Choice of Car
Part of the cost of your premium depends on how expensive it is to repair or replace your car in the event of an accident.
If you recently got a new high-performance or luxury car, these vehicles have more expensive parts and may require specialized technicians to repair. Your insurance company will factor in the added cost potential on your premium. High-performance cars are also known for being faster and more powerful. The risks of driving fast car that's expensive to repair will factor into your auto insurance rates.
Even if you don't own an expensive car, the make and model of your vehicle can still effect your premium. From time to time, certain cars become more popular to thieves. Since your car insurance company will be liable for any thefts involving your vehicle, they'll want to hedge against this risk by charging you a higher premium.
Adding a New Driver to Your Policy
Adding drivers to your policy whom auto insurance companies see as a risk, especially teens, can increase your premiums. There isn't much you can do to avoid these types of increases, which are standard across the auto insurance industry. However, there may be discounts available for teens if they've completed driver's education courses or if they are good students.
Your Insurer's Cash Reserves Are Running a Little Low
From time to time, insurance companies run short on funds, just like the rest of us. They have to make up for this by charging more on their insurance premiums. Bottom line, providers need to be able to fulfill claims for their policy-holders, which means policy-holders also feel their carrier's financial strain. The inability to pay out claims is a dire situation for an insurance company, one that can put them out of business in a hurry.
Canceling Another Policy
Many insurance companies offer a discount for having multiple policies (e.g. car, home, and life insurance bundles). If you cancel coverage that's part of your policy bundle, you may face higher premiums.
Additionally, many car insurance companies offer a discount for insuring multiple cars with them. Removing a car from a multi-vehicle policy could cause you to lose the discount and raise your rates.
You Filed a Claim
You might think that filing a claim is what insurance is for. That's true, but insurance companies don't like it when you file what they perceive to be unnecessary or excessive claims. They can't make a profit if every person they cover figures out a way to get their premium back. The more claims you make, the higher the chance that your premium will go up.