Practically everyone needs car insurance for their vehicles — every U.S. state except New Hampshire requires it. Even though New Hampshire does not require an insurance policy, drivers are still financially responsible for covering damages. Some policyholders end up paying higher premiums in the future. If you recently ended up with a higher insurance payment, you may be wondering why that happened. This guide will outline some of the reasons car insurance goes up and ways to keep your insurance premiums low.
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15 reasons your car insurance goes up
Insurance premiums fluctuate for several reasons. If your insurance has gone up recently, it can be because of one of these factors.
Age and driving experience
Younger drivers often face higher insurance premiums due to their increased likelihood of being involved in accidents. Less experienced drivers will also face higher premiums, but they decrease over time. Insurance premiums also go up as you get older. Drivers in their 70s may see their insurance premiums climb because of the higher risk of an accident. Even if you are a great driver, insurance companies can look at their data and see which age groups are more likely to be involved in accidents.
Driving record
Racking up traffic violations and getting involved in accidents can lead to higher insurance premiums. Insurance companies incur a risk for each driver they insure. If the driver’s past behavior increases the insurer’s risk, the company will respond with higher premiums.
Changes in financial circumstances
While unemployment status doesn’t directly affect premiums, your credit score and address will impact your premiums. Consumers with higher credit scores tend to score lower premiums. You can also get a lower premium if you are in a less populated area. Drivers who live in cities and other high-traffic areas may be more likely to get involved in an accident because of traffic congestion.
Moving to a high-risk area
Insurance companies look at your location when assessing premiums. If you move to an area with a higher crime rate or a greater number of accidents, you may end up with a higher premium. The price increase represents the high risk the insurer takes to offer the policy.
Vehicle type and model
More expensive vehicles tend to have higher insurance premiums. Luxury vehicles are more expensive to repair, and not all of the parts may be readily available. More common vehicles tend to have lower insurance premiums.
The car’s safety features
The number of safety features in your car can impact the total costs. A car with many safety features can warrant a lower insurance premium. Cars with little to no built-in safety features can result in higher premiums.
Vehicle usage
Insurance companies view each commute as a risk. These policy providers have the highest risk for drivers who frequently travel long distances on the road. A long commuting distance and high annual mileage can lead to higher premiums. Cars used for business also incur higher premiums.
Insurance score
Insurance companies look at insurance scores just as lenders review credit scores before giving out loans. Your insurance score is a confidential number that reflects the likelihood of you filing a claim while having coverage. A less favorable insurance score can result in higher premiums. Your insurance score can also change over time based on your driving record and other factors.
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Changes in insurance company underwriting guidelines
Insurance companies can adjust their underwriting guidelines based on market conditions and recent losses. These adjustments can impact insurance premiums and lead to higher costs.
Inflation and rising repair costs
When a car is involved in an accident, an insurance company has to cover repairs. If those repairs get more expensive, the insurance company will often charge higher premiums to minimize their risk. Insurance companies adjust their premiums based on inflation. Economic cycles with higher inflation may see higher auto insurance premiums.
Increase in claims in your area
Insurance providers look at changes in local claims when assessing your premiums. If insurance companies have noticed more claims in your area, they may raise premiums for everyone in the area to mitigate their risk.
Changes in state regulations
Some state regulations impact important components of insurance policies, such as the minimum insurance coverage. If the minimum coverage increases, insurance premiums will also increase.
Deductible adjustments
Your deductible represents the out-of-pocket costs you must pay before your insurance coverage takes effect. Lowering your deductible will increase your insurance premiums because a lower deductible increases the insurer’s risk.
Coverage changes
Any adjustments to your coverage will modify your insurance premiums. Getting more coverage will increase your insurance premiums while requesting less coverage can reduce your insurance payments.
Lapses in coverage
Insurance companies may increase your premiums if there is a lapse in your coverage. Any coverage lapses increase the insurer’s risk.
Tips for managing premium increases
Some people see their car insurance premiums go up, but that doesn’t have to be you. These strategies can help keep your insurance premiums where they are.
Maintain a clean driving record
Practicing safe driving habits and keeping a clean driving record can keep your insurance premiums low. If you drive for multiple years without filing claims, insurance companies will want to keep you and may lower your premiums.
Consider discounts and savings opportunities
Insurance companies offer bundles for people who need multiple policies. For instance, you may need an insurance policy for your home and car. Getting these policies from the same insurer can result in a discount. Completing driving safety courses can also help, as completing these courses can demonstrate that you are a good driver.
Review policy details
Your needs change over time, and an insurance policy that worked well in the past may need some adjustments. Some people review their policies and opt to raise their deductibles and get less coverage. These strategies increase your risk but result in lower premiums. Other policyholders may want to keep everything as it is, but it is a good idea to review your policy details to make sure you are happy with it.
Seek advice from an insurance agent
An insurance agent can walk you through the process and help you secure lower insurance premiums. These agents can also help you manage insurance premium increases that come from requesting higher coverage and lower deductibles.
Staying on top of car insurance
Policyholders have several ways to adjust their policies to reduce their premiums. Knowing what events and decisions trigger higher and lower insurance premiums can help you manage your policies and gain control over your finances. Make sure you only take on as much car insurance as you can afford.
FAQ
How can I find out why my car insurance increased?
You can check with your insurance provider to see why your car insurance increased. A representative can look into the situation and see why your rates went up.
Can my car insurance go up if I haven’t made any claims?
Your car insurance can go up if you have not made claims. Moving to a high-risk area, reaching 70 years old, and incurring traffic violations can result in higher premiums.
Is it worth shopping around for car insurance quotes if my rates have gone up?
It is worth shopping around for car insurance quotes if your rates have gone up. You may find an insurer that offers better protection for a lower cost.
