Car owners are always on guard to ensure their insurance does not go up when claims have not been filed.
However, for drivers, it can be frustrating when your car insurance goes up when you have been careful on the road. In most cases, auto insurance can increase based on across-the-board rate hikes. This usually happens when an insurer and the state agree on a new rate plan for that year.
At the same time, some car insurance can rise based on factors that are out of your control. This article explains why your insurance might go up without reason.
Traffic Violations
A traffic violation is the most popular reason why your car insurance rate will go up. The premiums will go up depending on whether the offence is minor or major.
You can avoid this rate increase net purchasing minor violation forgiveness or fighting in court. You can also enrol for a defensive driving course. Minor traffic violations entail:
- Failure to yield
- Following too close
- Improper backing
- Improper passing
- Traffic device
- Speeding
On the Other Hand, Major Traffic Violations Include:
- Attempted felonies
- Leaving the scene of an accident
- Careless driving
- Drag racing
- Driving under the influence
- Refusal to stop for an officer
- Vehicular homicide
- Passing school bus
- Driving with suspended/expired license
- Wrong-way
- Reckless driving
Low Credit Score
Most insurance companies determine the insurance premium based on your credit score. If your credit score drops, there is a possibility that your insurance premium may go up.
Insurance companies have determined that individuals with a low credit score can easily get into accidents than people with high ones.
Consequently, they tend to charge extra on customers with a bad credit score. It is therefore advisable to keep watch of your credit score.
Insurance Fraud
Insurance fraud entails behaviors like inflating the damages for an accident that did occur or making up an entire accident.
Your car insurance may go up even when you have not committed any insurance fraud. Insurance companies lose billions of dollars annually in scam from other people’s lies. This adds to insurers’ costs, and they have to recover the money by charging you extra.
Change of Residence
Insurance claims are calculated based on your area of residence. When you relocate, chances are high that your insurance charges will go up. For example, if you go to a metro area from the suburbs, your insurance will likely go up.
Uninsured Drivers
Despite insuring your vehicle, you may pay for the cost of other uninsured drivers on the road. Most insurers usually incur a lot of expenses when settling claims involving uninsured drivers.
In the end, insurers typically pass these costs to policyholders. You may also spend more by adding uninsured or underinsured motorist coverage to your policy in some jurisdiction.
Increasing Medical Costs
With the number of drivers on the road rising, accident figures are also spiking.
In the end, insurers have to pay more for each claim following an accident. Rising medical costs directly translates to higher auto insurance premiums.
When auto companies payout progressively higher medical expenses due to accidents caused by their policyholders, the whole pool of insured people will be affected. This affects holders who are not even at fault when it comes to accidents.
Extreme Weather Conditions
Extreme weather conditions like hurricanes and floods in your area can affect your car insurance. Generally, when such hazards occur, there is an overall increase in claims in the affected area.
Insurance firms are therefore forced to raise rates to make up for that. In the end, If such weather patterns persist, your auto premium will be affected.
Old Age
While you get older, your car insurance will also go up. In most jurisdictions, insurance costs usually rise once you hit the age of 70.
Most insurers treat elderly drivers almost the same as teen drivers. Teenage drivers are known to account for most crashes.
Most insurers provide senior discounts for policyholders aged 50 years old, but if you are over 70 years old, your rate will likely start to rise.
Change In Payment Plan Fees
Some insurance companies are known to change financing rates regularly. In some cases, they can add new service charges which you may fail to notice.
It is advisable always to review your payment options and make sure you choose one that suits your needs. Some insurers will give you zero financing, while others can charge up to 5% or more.
In general, such charges can have a significant impact on your total insurance cost at the end of the year.
New Driver On The Policy
When you add another driver to your car insurance policy, it will affect your rates in the end. Chances of the policy increasing significantly can be because the driver is a teenager.
This is because teenagers have a statistically higher incidence of car accidents on the road.
New Models Cost More To Repair
When your car model is the latest, the insurance charges will go up because such vehicles cost more in repair. These types of vehicles are filled with more sophisticated equipment and technology. These costs are passed on to consumers, including auto insurance carriers.
Avoiding Your Insurance From Rising
An increase in insurance comes as a result of a combination of factors, as seen above. However, by following these practices, you can take control of your insurance from rising and eliminate unnecessary costs.
Eliminate Coverage You May Not Need Like, Roadside Assistance and Car Rental Coverage.
Always consult with your insurance agent to determine things, you may not need.
Research On Additional Discounts Offered By the Insurer.
Available discounts include offers that let you pay the entire annual or six-month premium at once and memberships that offer discounts. You can also talk to your insurance agency about possible savings.
Review Comprehensive Coverage.
Under this cover, when your vehicle is in an accident, the insurance company would likely total the car.
Practice Mindful Driving To Cut Costs.
Despite the roads having more distraction, always be a safe driver.
Bundle Insurance.
Most insurance companies offer multi-policy discounts when you combine your home insurance, health, and vehicle with them. Furthermore, bundling your insurance with one company makes it easier in streamlining billing claims, while at the same time, it helps eliminate dangerous coverage gaps.
Monitor Your Credit Score.
Always ensure your credit score remains positive to avoid incurring extra insurance charges.
Work With An Independent Insurance Agent.
Independent agents can help navigate insurance variables and review your eligibility for premium discounts with every insurance company.
Factor In Moving Budget.
When relocating, always ensure you factor in your car insurance rate within the budget since it varies based on location.
Research On Better Premiums.
If your policy rates increase upon renewal, consider shopping around and getting quotes from competing companies.
Final Word
In general, insurance rates are volatile, and many aspects go into calculating premiums, and slight changes can make a big impact. As a policyholder, it is advisable to know what will make your insurance go up.
This will put you in a better position to prevent increases that are unexpected. Insurance companies can recalculate your rate at every renewal, and sometimes a rate increase is independent of your actions.
If you see a substantial rate increase without making a single change to your policy, it is time you to start shopping around for cheaper insurance.