Once or twice a year, you open your new car insurance policy and wonder how much your rate increase is going to be. It's not that you had an accident, received a ticket, or got arrested for a DUI. It's that you recently renewed your insurance policy.
Car insurance companies seem to raise rates on your premiums almost every time you renew the policy, no matter your driving record or lack of speeding tickets. From California and Massachusetts to New York and Hawaii, in recent years, many safe drivers see higher rates with each renewal. So what's driving the cost of your car insurance?
Here's a look at key drivers of increasing insurance rates:
New Vehicles Are Getting More Expensive
With advanced safety features and new technology, the cost of a new or used car has soared in recent years. According to auto industry analysts, the average price of a new car in 2019 was $36,718. More expensive cars are part of the reason you may see a rate increase even when you don't have any traffic violations or moving violations. Your insurance agent and insurance company look at insurance claims to see what the cost of repairs is on average. When new cars are so expensive, replacing them or repairing them is also very expensive, and you're paying for that in your premium even if you're bundling home insurance too.
Auto insurance companies are in business to make money, so you aren't just paying for your car repairs. Your car insurance premiums are used to pay for the repairs for another motorist with the understanding that if you have fault accidents, the insurance company pays for your repairs. The average cost of a car affects the costs of replacement and repairs. As long as the prices of new vehicles continue to rise, then so will your car insurance costs.
Your Credit Score Changes
Many factors go into the final cost of your car insurance. One of the most surprising to most people is the part that your credit score plays. When your credit score falls for some reason, it can result in auto insurance premiums that rise.
The decline in your credit score doesn't need to be significant to have an impact. California is the only state that created a state law that keeps insurance companies from using credit scores as part of the equation they use for auto insurance premiums. You should routinely check your credit history for any changes or errors on your credit report.
Moving Violations or Tickets
Your car insurance company needs to know that you're a safe driver. They want you to pay attention to speed limits and not fall into the category of a distracted driver. Driving safe lowers your chance of being in a car accident with or without bodily injuries. Repair costs for your vehicle and the car you hit can cost your insurance company tens of thousands of dollars, so they want to know that you aren't likely to have at-fault accidents, especially if there are medical costs involved.
Of course, you aren't a terrible driver just because you received a speeding ticket or some other traffic violations. Nevertheless, these can cause your rates to rise. You might consider asking for a higher deductible to lower your insurance rates or seek out additional car insurance quotes.
And remmeber, as more and more time passes since your last ticket or moving violation, it will gradually lessen the effect that they have on your insurance premiums.
We all know that age plays a part in your car insurance rate. When you have a teenager that is learning to drive for the first time, you expect to see your rates rise. You have someone with minimal experience behind the wheel in an age group that statistically has more crashes; this can increase the chances of at-fault accidents. However, age plays other roles in your rate even as you age.
If you're a driver over the age of 70, you may find your insurance rates rising. The sweet spot for insurance premiums is around the age of 50. The premium increase may become automatic when you reach 70 years old.
A Lapse in Automobile Insurance
It happens for a variety of reasons. You might forget to pay your premium, or the credit card you use for automatic payment expires. When your policy lapses, your insurance will raise the rates when you reinstate a new insurance policy. It's a red flag when car insurance lapses.
If your lapse in insurance was last week, then you might be able to reinstate the policy without too much of an increase, if any at all. Be sure to talk to your insurance agent and explain the situation.
However, if it's been a month or even a year, you might see your insurance premiums rising significantly, even with a higher deductible. It's a good idea to reinstate your car insurance as quickly as possible to save yourself money on your monthly payments.
Moving to a New Zip Code
Moving is an exciting time, especially if you're moving to a new house, a new town, or a new state. You're going to get to meet new people and see new things. It's your chance to clean out your closets as you pack to move. One thing you might not consider in all the excitement is how it will affect the costs of your auto insurance policy.
Yes, moving can cause a rise or fall in your insurance premiums. Your new hometown may see a higher rate of accidents or car thefts. You might be moving from the country to a busy city with more drivers. Repair costs and medical care may be more expensive in your new location.
All of these factors can cause your insurance rates to go up or down. Your insurance company is always looking at the odds that you'll be in an accident and how much it will cost.
Recent Car Accidents
When you have a car accident, you'll probably see a rise in the cost of your insurance. Sometimes this happens even if the accident wasn't your fault. While some insurance companies offer "accident forgiveness," the insurance companies will consider you more of a risk for at-fault accidents if you recently been in an accident.
You might receive a moving violation when you're in an accident that's your fault. Both the accident and ticket are reasons that will raise your rates. That is because car accidents cost insurance companies a lot of money.
Filing Comprehensive Claims
If you have full coverage insurance for your car, there may come a time when you file a comprehensive claim. That is a claim for repairs for something other than crash damage, such as a broken window, a burglary, damage from hail, a tree falls on your car, and a variety of different acts of nature or vandalism. While you probably won't see a rise in your insurance rate after your first comprehensive claim, you might after filing three or more.
If you own a car, then you have to purchase car insurance. Of course, you want to pay as little as possible for as much coverage as you can afford. It can be frustrating seeing your car insurance rates going up without an apparent reason. These are some of the reasons that you might see a rise in your insurance premium.