There is nothing more frustrating than playing by the rules then getting punished anyway. Even though you have been a safe driver, and not had any tickets, your insurance company raises your rates. Even drivers who maintain a clean driving record can get stuck with a rate increases from their insurance companies. If your insurance company has raised your auto insurance premium, the best way to combat the increase is to shop around and compare cheap car insurance rates from multiple companies.
Insurance companies use complicated models to set car insurance rates. There are many aspects that contribute to the premiums drivers pay. First, they evaluate your risk to determine how likely you are to file a claim and then they estimate the likely costs. This is why drivers with tickets and accidents pay higher rates than those who are clean drivers. With a clean driving record there are still factors that can cause your rates to increase. Let’s take a look at some of the factors that may be affecting your rates. First are factors that are specific to your personal situation and may be within your ability to control. The second list is factors that are just part of the industry and something you may not have control over.
- New Car-The more expensive or exotic the new car is, the more it will cost to insure.
- Multi Policy-Cancellation of home policy or other policy can cause you to lose the discount for having more than one policy with the same insurer.
- Changes in your commute-If you went from at-home work to office work, you will be on the road more, which means more risk, and the loss of your low mileage discount.
- New Driver-Adding a new or inexperienced or changes of the primary drivers of various vehicles on the policy will cause an increase.
- Change of address-Placing you in a new area that may be more expensive in terms of insurance. The new location may be a higher risk area, due to crime rates and traffic density.
- Credit Score-Changes in your credit score, especially a drop in your score, can mean a rise in your rate.
- Change of employment-You may lose a group discount, a professional discount, or possibly have the distance to work change, making your rate go up.
- Mistakes-Yes, insurance companies can sometimes make mistakes. Don’t assume that your rate is the best rate, or that it is necessarily correct. There are computer and human errors that can occur, so it is always worth studying the factors of your insurance costs with your representative when you’re uncertain
- Medical Costs-Increasing medical costs are putting a dent in the bottom line of insurance companies. These costs are forwarded on to their customers by increased car insurance rates.
- Increasing Repair Costs-The growing cost of labor is a major contributor to overall increases in repair costs. A study by CarMD.com claims the cost of vehicle repairs increased 10% in 2012 alone. The largest repair cost comes from replacing expensive technology in newer vehicles
- Uninsured Motorists- The Insurance Research Council estimates that $2.6 billion in uninsured claims were paid out in 2012. The total amount of uninsured claims and the legal process it takes companies to secure settlements is huge. The IRC also estimates that uninsured claim payments are up 75% over the last 10 years and translated to a $14 increase per insured individual!
- Inflation- As cars become more expensive and medical, property damage reimbursements, and other industry expenses increase, so will your annual premiums.
- Fraudulent claims-Over-inflating damages and filing false claims cost the industry billions of dollars each year. It is a serious problem that can drive up your rates. However, many insurance companies are doing their best in trying to identify and prevent insurance fraud.
The bottom line is, because there are so many different variables and ways your premiums can go up from year to year, it’s safe to assume they’ll continue to fluctuate over time. What is important to know is that whatever happens to your insurance rates, it’s not necessarily anything you have done wrong. Just keep driving safely and maintain a clean driving record and this will keep the increases to a minimum. Understanding what makes an insurance policy increase on renewal puts you in control of your policy, and in a location to negotiate for the best cheap car insurance you can afford.