Why Did My Car Insurance Increase?

January 23rd, 2019 by

If your car insurance recently went up for no apparent reason, you’re not alone. Recently, I received a letter in the mail from my insurance company. The top of the letter stated “This is Not a Bill”- but it stated the balance that would be automatically deducted from my bank account monthly. I noticed the monthly payment was not what I had been paying the past year, but instead, higher.  No, the payment was not significantly higher but it was enough for me to slightly worry why it had increased. I haven’t had any recent speeding tickets, nor have I been involved in any accidents in the past two years (knock on wood) – so what is causing this increase?

Data shows between 2006 and 2016, auto insurance costs increased as high as 50 percent (Cover Financial, Inc.). There are many different reasons why your auto insurance could have gone up recently. The most obvious reasons are tickets, accident claims or other citations. Even if the car accident was not your fault, if you file a claim through your insurance company – chances are they will increase your rate. That’s why most people will pay out of pocket for minor accidents. As far as tickets, your increase basically depends on the severity of your ticket (Quote Wizard). Any claims or tickets can stay on your driving record for up to five years.

(Graph shows Company Rate Increase after Single Accident. Source: Quote Wizard)

But I haven’t had any accidents or tickets, so what’s the reason? Another reason could be the different risk factors in your area. Insurance companies need to determine which areas around the country are the highest risks to them, so they adjust their rates to offset areas where they take a profit loss on insured drivers (Quote Wizard). The number of uninsured drivers in your area, the high rate of crime in your area, and the weather are all contributing factors to increases as well.

Rising medical and repair costs have been passed along to the consumer through increased premiums (Cover Financial, Inc.). There are more drivers on the road now than ever, and this has resulted in an increase of accidents. Also, safety features being added on to vehicles has resulted in higher repair costs and increased levels of theft.

Although it is currently excluded in Massachusetts, California and Hawaii, you may see an increase in your auto insurance due to a lower credit score. There are many other contributing factors to rising insurance costs; such as moving, higher speed limits, extreme weather, insurance fraud, etc.

(Graph shows those with affected premiums due to credit score. Source: Cover Financial, Inc.) 

So, what should you do if your premium increased? You can shop different companies for a lower quote, or you can bundle multiple insurance policies within the same company. Some insurance companies will offer a discount if you bundle auto insurance and home insurance together. Other options include paying in full, such as a sixth-month period or a year, or enrolling in auto-pay. Auto-pay will sometimes score you a discount with the insurance company (Quote Wizard).

 

 

References

Cover Financial, Inc. Why Did My Car Insurance Go Up For No Reason? January 2019.

Quote Wizard by Lending Tree. Johnson, A. Why Did My Car Insurance Company Raise My Rates? January 2019.